ABSTRACT
The conventional view rejects punitive damages for breach of contract on the ground that expectation damages adequately protect the promisee while preserving the possibility of efficient breach. This Article reconsiders the traditional compensatory boundary of contract remedies, disentangling the compensatory and incentive functions of contract remedies and, in doing so, shows that not every overcompensatory award serves a punitive purpose, and not every punitive remedy necessarily results in overcompensation of the plaintiff. We ask whether punitive or overcompensatory damages can serve legitimate economic functions in contract law without undermining the logic of efficient breach. Drawing on comparative legal materials and law-and-economics scholarship, the Article shows that, although punitive remedies are generally disfavored across legal systems, different jurisdictions have developed adjacent instruments that reveal a more complex remedial landscape. Building on these comparative insights, the analysis suggests that the categorical exclusion of punitive and overcompensatory damages rests on an incomplete account of normative goals and incentive effects of breach remedies.
Bix, Brian and Parisi, Francesco, Punishment and Its Relative Absence in Contract Law (April 27, 2026), Minnesota Legal Studies Research Paper No 2026-27.
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