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Contract Law In Georgia: Can You Recover Punitive Damages When Someone Breaks Your Contract Agreement?

contract.jpgAlmost everyone in our country is affected by contract agreements. And people and businesses break those agreements all the time. That’s reality. And when someone or a business fails to perform as he or she promised, in accordance with a contract, clients seem to always ask: can I recover more money as punishment for the reproachable manner in which our contract was breached? The answer, in Georgia: maybe.

The Georgia code expressly states “[u]nless otherwise provided by law, exemplary damages shall never be allowed in cases arising on contracts.” O.C.G.A. § 13-6-10. (Exemplary damages are commonly referred to as punitive damages, a penalty [punishment] imposed against the wrong-doer to deter future, similar conduct.)

As you can read, the Georgia code disfavors punitive damages for breach of contract actions, and the Georgia courts have agreed. But, there exists avenues other than stating your claim as a breach of contract, in order to maximize your recovery if punitive damages seem warranted. You may be able to claim that the person who breached your contract committed a civil tort against you.

A civil tort is an unlawful violation of a private right other than a breach of contract, generally. That means the wrong-doer must breach an independent duty created by statute or common law that, importantly, was owed to you. And that breach of duty must be the actual or proximate cause of your injury (damages). So if a person or business committed a civil tort against you arising out of a contract, then, punitive damages may be possible, under Georgia’s civil tort statute, O.C.G.A. § 51-12-5.1.

For example, if a a person keeps a car without paying rental fees owed to you by contract, Georgia courts have reasoned that the civil tort of conversion may be claimed against that wrong-doer (and punitive damages possible), since he or she is unlawfully in possession of your property, after defaulting on payment. Or, maybe fraud or deceit was committed against you in the context of a contract agreement. Or, maybe a third party (stranger to the contract) interfered with your contractual rights and thus caused your contract to be terminated.

The above-mentioned civil claims are complex, but nevertheless they are tort claims, and while they may arise out of a contract dispute, these type of claims carry with them an independent cause of action that “may” entitle you to punitive damages. Ultimately, the substance of your claim–as “truly” being a tort claim rather than being a breach of contract claim in disguise–will determine if punitive damages are on the table, in Georgia.

(You must always be mindful that punitive damages, in Georgia, can be difficult to recover because the conduct in question must be more than merely negligent conduct or even grossly negligent. Generally, the conduct must be intentional or willful, or demonstrate a complete want of care that would lead an ordinary person to presume that the wrong-doer had a conscious disregard for the consequences of his or her action[s].)

You definitely need a good lawyer when dealing with breach of contract issues because whether or not punitive damages are possible, a good lawyer still must evaluate issues such as liquidated damages provisions (O.C.G.A. § 13-6-7); mitigation of damages (O.C.G.A. § 13-6-5); recovery of lost profits; and recovery of actual, remote, or consequential damages, amongst many other considerations.

Every case is different. So your recovery will depend on a good lawyer who can apply the unique facts of your case to the multiple facets of Georgia law.

Contact the Oinonen Law Group LLC today for an initial consultation.