Punitive Damages for Breach of Contract

• Posted by Geoffrey G. Gussis on August 11th, 2005


• Filed in Corporate/M&A

Punitive damages in breach of contract cases - the thought makes even the most seasoned transactional attorney shudder.  The ContractsProfBlog points to a recent California case (Robinson Helicopter Company, Inc. v. Dana Corporation 04 C.D.O.S. 11271) that will raise a lot of eyebrows.  Christine Scheuneman of Pillsbury Winthrop Shaw Pittman LLP briefs the issues in this Mondaq article (free registration required) and concludes as follows:

"Until the implications of Robinson are better understood through
subsequent decisions, parties performing contracts subject to
California law should be aware that their written and oral
representations about performance, including products and services,
might expose them to liability for tort damages. Practitioners should
act defensively in negotiating their agreements and in performing them
by (i) clearly defining the requirements of performance, (ii)
identifying and limiting the representations about performance, (iii)
allowing the other party an opportunity to audit performance, (iv)
identifying the appropriate contracting parties to limit exposure, and
(v) adding carefully-drafted language to their agreements limiting the
types of damages to which they are exposed. In this way, perhaps
practitioners can preserve the economic loss doctrine as it relates to
real estate matters."

Link: ContractsProf Blog: Punitive damages for breach of contract.