Black’s Law Dictionary defines the terms “[e]xemplary or punitive damages” as “damages on an increased scale, awarded to the plaintiff over and above what will barely compensate him for his property loss, where the wrong done to him was aggravated by circumstances of violence, oppression, malice, fraud, or wanton and wicked conduct on the part of the defendant, and are intended to solace the plaintiff for mental anguish, laceration of his feelings, shame, degradation, or other aggravations of the original wrong, or else to punish the defendant for his evil behavior or to make an example of him…. Unlike compensatory or actual damages, punitive damages … are based upon an entirely different public policy consideration – that of punishing the defendant or of setting an example for similar wrongdoers….” Black’s Law Dictionary (5^th Ed. West 1997), page 352. Similarly, California Civil Code Section 3294 provides in pertinent part: “[i]n an action for the breach of an obligation not arising from contract, where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice, the plaintiff, in addition to the actual damages, may recover damages for the sake of example and by way of punishing the defendant.” [Emphasis added.]

California has a statute which specifically describes the damages available for a simple breach of contract. California Civil Code Section 3300 provides: “[f]or the breach of an obligation arising from contract, the measure of damages, except where otherwise expressly provided by this code, is the amount which will compensate the party aggrieved for all the detriment proximately caused thereby, or which, in the ordinary course of things, would be likely to result therefrom.” The jury instruction to be read  in breach of contract cases in California explains that the damages available in California for breach of contract “is to put [the plaintiff] in as good a position as [he/she/it] would have been if [the defendant] had performed as promised.”Because one normally does not usually breach a contract under “circumstances of violence, oppression, malice, fraud, or wanton and wicked conduct,” punitive damages are generally not permitted for a simple breach of contract. While there are California causes of action that specifically permit punitive damages, they are the exception and are based not on the actual breach, but upon some other underlying conduct of the defendant, such as fraud.

Each business and business entity is unique. To understand the different options and which direction will be best for your situation, you need to consult with an experienced corporate attorney. Michael Leonard, Esq. of San Diego Corporate Law, named “Best of the Bar” by the San Diego Business Journal in 2016, has the expertise to guide you through everything from forming your business, to creating buy-sell agreements, to executing contracts, and anything in between. To schedule a consultation to discuss any business-related matter, please contact Mr. Leonard by visiting San Diego Corporate Law or by telephone at (858) 483‑9200.