The Myth That Promisees Prefer Supracompensatory Remedies: An Analysis of Contracting for Damage Measures

Abstract

Courts will not enforce liquidated damage clauses when a stipulated sum exceeds (i) the harm that the promisee could reasonably expect to suffer from breach or (ii) the actual harm that breach turned out to cause. Courts traditionally have not awarded punitive damages "for a breach of contract unless the conduct constituting the breach is also a tort for which punitive damages are recoverable." Courts also will not grant specific performance "if damages would be adequate to protect the expectation interest of the injured party," nor will courts enforce contracts that accord promisees a right to specific relief.

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