Contract Law 77 V Mental Anguish and Punitive Damages

TL;DR

Learn about the treatment of emotional and punitive damages in contract law, including the limitations and requirements for awarding such damages.

Transcript

for most of this course we have focused on economic or pecuniary damages such as compensating an aggrieved party for the value of lost property future earnings or cost of repair but in this lesson we will learn about contract laws treatment of other types of damages especially emotional damages and punitive damages we'll examine two cases Mohawk vs... Read More

Key Insights

• 👮 Contract law primarily focuses on economic damages, but there are instances where emotional and punitive damages are considered.
• 🏆 Non-pecuniary emotional damages are generally not awarded unless they are foreseeable and likely to cause serious emotional disturbance.
• 💼 Punitive damages can be recovered in cases of tortious interference with a contract if certain conditions, such as compensatory damages and actual malice, are met.
• 💨 Recovering non-pecuniary and punitive damages for a contractual breach is challenging, and courts are generally reluctant to expand damages in this way.
• 🥳 The availability of emotional distress damages may depend on the specific terms of the contract and the parties' intentions.
• 👻 Intentional interference with a contract can be seen as a tort and may allow for additional damages beyond what is available for contractual breaches.

Questions & Answers

Q: What is the difference between pecuniary and non-pecuniary damages?

Pecuniary damages are easily quantifiable in monetary terms, such as medical bills or lost wages. Non-pecuniary damages, on the other hand, cannot be easily quantified and include emotional distress and pain and suffering.

Q: Why did the court in Bohot focus on consequential damages instead of compensatory damages?

The court followed the intention of Congress to protect whistleblowing federal employees by incorporating the common law meaning of consequential damages into the Whistleblower Protection Act. Their interpretation suggests that compensatory damages may have led to a different outcome in the case.

Q: When can mental anguish be recoverable in a breach of contract?

According to the second Restatement, mental anguish is recoverable when the breach is likely to cause serious emotional disturbance or if it also resulted in bodily harm. However, emotional distress damages for breach of an employment contract are generally not available.

Q: What are the conditions for awarding punitive damages in cases of tortious interference with a contract?

Punitive damages can be awarded if there is an award of compensatory damages and if there is a showing of actual malice. The court in Rite Aid v. Lakeshore Investors remanded the case to determine if these conditions were met.

Q: Does the tort of intentional interference with a contract undermine the goals of contract law?

Some argue that allowing punitive damages for intentional interference goes against the theory of efficient breach and may discourage parties from breaching contracts when efficiency gains are possible. However, others believe that it can deter stonewalling and promote the fulfillment of contractual promises.

Summary & Key Takeaways

• The case of Bohot v. Department of Agriculture explores the issue of non-pecuniary emotional damages, where the court held that such damages are not sufficiently foreseeable to be awarded.

• The case of Rite Aid Corporation v. Lakeshore Investors discusses punitive damages and confirms that they can be recovered for tortious interference with a contract if certain conditions are met.

• Recovering non-pecuniary and/or punitive damages for a contractual breach is challenging, with several hurdles to overcome.