A contract is a legally binding agreement between at least two individuals/companies that defines the rights and duties of all the parties involved in an agreement.
In many cases, one party may fail to comply with some of the terms in an agreement, which incurs a breach of contract. Accordingly, a breach of contract may have serious consequences, such as punitive damages in court.
In this article, you will learn more about punitive damages in breach of contract in Florida.
Back to Basics – Understanding Contractual Obligations in Florida
A breach of contract occurs if any of the terms in a contract are not met. To illustrate this concept, let us say there are two individuals – Jane and Peter.
Jane has a vacation home in South Florida while Peter owns a construction business. Jane hired Peter to build a swimming pool in the backyard of her property. Before signing the contract, she made it clear that she wanted a specific design and thickness for her pool.
Then, they signed a contract that detailed the pool’s specifications and scope of work. Peter proceeded to order the materials to build the pool, but one of the manufacturers failed to deliver his part.
Peter decided to complete the service without following the parameters pre-determined in the contract without informing Jane. In this case, Paul breached the contract.
However, what happens when a party fails to perform its obligations in a contract? More often than not, most parties try to negotiate to settle the situation out of the court.
If not, they may resort to other means to find a solution, such as mediation, arbitration, or going to court. When you litigate a case in court, and one party is found liable for breach of contract, it usually gives rise to damages.
What Are Punitive Damages? – Explaining the Term
Punitive damages are legal damages that are not compensatory. Instead, a Florida court award a plaintiff punitive damages to punish the defendant for something the judge or the jury believes they have done inappropriately.
In popular culture, the most famous situation involving punitive damages may be the case Liebeck v. McDonald’s Restaurants (1994).
The situation began when 79-year-old Stella Liebeck bought a cup of coffee at a McDonald’s drive-thru in Albuquerque, New Mexico. However, the coffee was at a temperature that was higher than the industry average and spilled it on her lap.
Subsequently, she sued McDonald’s and a New Mexico civil jury awarded her $2.86 million in punitive damages for the burns she suffered.
Punitive Damages in Breach of Contract in Florida – A Case Law Overview
According to Florida case law, the case Griffith v. Shamrock Village, Inc. (94 So.2d 854 (Fla. 1957) provides that:
“The general rule is that punitive damages are not recoverable for breach of contract, irrespective of the motive of the defendant. But where the acts constituting a breach of contract also amount to a cause of action in tort, there may be a recovery of exemplary damages upon proper allegations and proof.”
Also, the case Lewis v. Guthartz (428 So. 2d 222, 223 (Fla. 1982) provides that “it is now a well-settled rule in Florida that punitive damages are not recoverable in a breach of contract action, absent an accompanying independent tort.”
In this case, the Florida Supreme Court did not reinstate the lower court’s permittance of punitive damages because the plaintiffs in the case failed to prove a tort that was either distinguishable or separate from the defendant’s alleged breach of contract.
In Florida, courts do not award punitive damages to plaintiffs because they are not willing to introduce uncertainty into business transactions. Instead, courts prefer to utilize compensatory damages as an adequate remedy for a plaintiff aggrieved by a contractual breach.
It is fundamental to note that the general rule is that a court cannot convert a breach of contract into a tort merely by allegations of malice. Hence, no matter how severely breached a contract may be, that does not provide the elements for a claim of tortious fraud.
However, if the fraud allegation has no bearing on the breach of contract, a court is more likely to give the plaintiff a leave to plead a claim for punitive damages- but only after presenting appropriate proof of evidence.
Punitive Damages in Breach of Contract in Florida – Seek Expert Legal Guidance Today
As it is plain to see, pleading a claim in court for punitive damages is a complex task. Hence, it is crucial to work with Attorney Romy B. Jurado from Jurado and Farshchian to help you throughout the process.