 Hello, it's Waylen Chao and this is discharge and remedies for breach of contract module 2c part d Let's now look at nominal liquidated and punitive damages You can technically sue for breach of contract even if you have not suffered, you know any loss because of that breach and And you can win a lawsuit like that and the court would order what's called nominal damages, so you would get Symbolic recognition that there was a breach of contract. There was some kind of wrongdoing That was committed by by the other by the other party Now the the thing to keep in mind is if you want your day in court just for that, you know symbolic victory That may aggravate a Judge judges do not like to waste time, you know on trivial matters and and the judge You know may say that you won the lawsuit but but they may also order you to pay some of the legal costs of Of the of the defendant of the other party Liquidated damages is where there is a specific clause in a contract which we call it liquidated damages clause Which which provides a specific amount of damages that an innocent party From a breach of contract is entitled to so to be a proper Liquidated damages clause that amount has to be a genuine Pre-estimate of the possible losses that may arise on on a breach of contract Now the purpose that we put a liquidated damages clause into a contract You know is to is to avoid litigation is to avoid a Dispute as to the amount of damages and also to provide a clear incentive for the parties to perform because they know exactly What the financial penalty would be if they didn't? now the actual size of What the actual loss would be? compared to the liquidated amount you know is is not it's not really relevant, but They're a liquidated damages clause sometimes may be viewed as a penalty clause where a court feels that You know the the amount of the of the damages that's set by the by the contract is Not a genuine attempt to estimate the the possible actual losses that may arise from a breach of the contract if it if it is viewed as a penalty clause by a court The court would say that the clause the liquidated damages clause is Unenforceable or in other words is not is not valid so let's say this is the contract between between drew and Justin and This is a very simplified version of a liquidated damages clause So it just simply says that if there is a breach of contract then then The actual damages or the damages are deemed to be the lesser of what the actual damages are and $10,000 so the effect of that is to cap the maximum amount of damages for a breach of contract to $10,000 Damages such as expectation damages are usually meant to Compensate the innocent party for their losses and exceptions that rule is punitive damages Punitive damages are intended to punish and discourage outrageous conduct an Award an award of punitive damages is in addition to compensatory damages such as expectation damages The award of punitive damages by a court is not that common in Canada As it is in in the US and also if if a court if any court does award punitive damages It's it's nowhere near as large in terms of the dollar value as what what often occurs in in a US court The general requirements that a court looks at to determine the the availability of awarding punitive damages is that the The breaching party the the one that that breached the contract had to have acted in a harsh Vintictive Reprehensible or malicious manner. So just breaching a contract straight away is not enough To to warrant punitive damages. It has to be behavior has to be you know much You know much worse than that The leading case in Canada on punitive damages is the Supreme Court of Canada decision in Witten and pilot insurance Let's have a look at that case by looking at actual excerpts from that case The first couple of excerpts set up the facts which are which are which are summarized in something called a head note A head note is is a summary of the case that we we that is found at the beginning So in in these facts we have Mrs. Witten and her husband Discovered a fire in in their house late at night. So they and their daughter You know ran from the house wearing only their night clothes. It was in the middle of winter. It was minus 18 degrees Celsius the Mr. Witten the husband gave his slippers to his daughter to go for help and And in the process he suffered serious frostbite to his feet The fire totally destroyed everything their home and everything they owned in their including including their their three cats The they had to move into into a cottage That they that they rented for 650 dollars a month The insurance company the company that provides the house insurance, which is pilot insurance Made a single payment of $5,000 for their living expenses and covered the rent for a couple of months And then they then they all of a sudden stopped paying that rent without even telling the family and then they they pursued What was described as a? confrontational policy In with respect to this insurance claim, you know, they knew that the that the family here was in very poor financial shape so they they decide to take advantage of the poor financial situation of Of of of this family they they essentially Asserted that this family had committed arson and started had started this fire So they made this assertion even though there was absolutely absolutely no proof that That that the fire was had been started by by arson So the local fire chief had said that it wasn't it wasn't arson the insurance company's own expert said there was no No evidence of of arson and and the case says that the the the insurance company's position of arson was wholly discredited at trial and its own lawyer conceded that there was no error of reality to the allegation of arson so at at the trial of this case the the jury awarded Pensatory damages which would have been covered the the cost or the value of the house and they also awarded $1,000,000 of punitive damages and that decision at trial was was appealed to the next Next level of court above it, which would have been the Ontario Court of Appeal There the the court allowed the punitive damages, but reduced them all the way down to a hundred thousand dollars So then then the case was appealed to the Supreme Court of Canada So the the legal issue that Supreme Court of Canada dealt with was whether the jury's award of the $1,000,000 in punitive damages should be should be restored The legal principles that come out of this case that are applied in this case are That punitive damages are awarded against the defendant in exceptional cases for malicious Oppressive and high-handed misconduct that offends the court's sense of decency Now let's look at how the court the Supreme Court of Canada applied the law To to the facts So they said that you know the more reprehensible conduct the higher the rational limit for the potential award of punitive damages and They they they noted that the need for denunciation is aggravated in this case where the conduct persisted over a lengthy period of time in this case it was two years up to the date of the trial and And they also said that despite the defendant's awareness despite the pilot insurance's awareness of the hardship it knew it was inflicting Indeed the insurance company anticipated that the greater the hardship You know to the to the to the family here the appellant the lower the settlement She would be she would ultimately be forced to accept so the court was saying that pilot insurance as a matter of conscious strategy was Was taking advantage of the financial hardship of this family to force them to to settle for a lower amount then Then what the insurance company was legally obligated to pay under the insurance? policy the the court here also noted that Insurance contracts such as the one involved here are purchased by the public to get peace of mind And it said that the more devastating the loss the more the insured may be at the financial mercy of the insurer And the more difficult it may be to challenge a wrongful refusal to pay the claim deterrence is required you know in this case the court says and The court also talks about talks about good faith so good faith in in terms of insurance contract is an obligation of insurance company and To to to honestly Abide by the terms of insurance policy in determining whether or not to pay out on a claim on that insurance policy So if it if it's required under the terms of the contract under under the duty of good faith They should pay what they're what they're obligated to pay under under the contract The the court here noted that this relationship of reliance and vulnerability that was outrageously exported by was outrageously exported by pilot in this case and they said that the jury in this case appeared to Decide a powerful message of retribution deterrence and denunciation had to be sent to the insurance company