Noneconomic Damages for Breach of Contract
Conventionally, promisees are told they can not recover noneconomic damages in a breach of contract suit. By prohibiting such awards, we protect the contract dispute resolution system from whimsy, unpredictable juries, and overcompensatory verdicts. At the same time, it’s obvious that breach of contract often will result in emotional losses. So the prohibition against noneconomic losses may be seen as a tradeoff that contract law gives promisees. “You get the fairly unique remedy of expectation damages even in executory contracts,” we say, “but there’s no crying in contract law.” Or, as I’ve argued in a previous paper, perhaps the prohibition on emotional damages serves to dampen the stakes in contract litigation — and to encourage the parties to work with one another again.
In a new draft paper, Temple student Alex Radus (TLS ’13) and I challenge the descriptive story of how contract damages actually work. The article, Instructing Juries on Noneconomic Contract Damages, is up on SSRN:
“Gathering pattern contract jury instructions from every State, we examine jurisdictions’ treatment of noneconomic damages. While the conventional account holds that there is a uniform preference against awards of noneconomic damages, we find four different approaches in pattern instructions, with only one state explicitly prohibiting juries from considering noneconomic losses. Lay juries have considerably more freedom to consider the promisee’s noneconomic damages than the hornbooks would have us believe.
We substantiate this claim with an online survey experiment asking respondents about a common contract case, and instructing them using the differing pattern forms. We found that subjects routinely awarded more than the promisee’s baseline economic losses. In one of the categories of instruction — in which contract juries are instructed to award a tort-like form of remedy — subjects returned almost two times more in damages than the promisee’s mere expectation. The resulting picture of contract remedies is considerably more complex than the conventional wisdom portrays, but significantly more realistic.”
Two things of note here. First, I was shocked by how hard it was to gather current pattern jury instructions from every state. Pattern instructions aren’t all in one place, and aren’t always online. I gained a great deal of sympathy for folks who used to have to do old-time paper research. Can you imagine? Second, around 1 in 5 states use a “natural result” instruction in contract cases that – to my eyes at least – is basically indistinguishable from a tort damage instruction. It’s surprising, to say the least, that such a significant difference between pattern instructions and the conventional account persists.