Punitive damages are awarded in addition to actual damages in some circumstances where the defendant's behavior is determined to be particularly harmful. In tort liability cases, courts may apply punitive damages if the plaintiff is able to prove that the defendant engaged in an intentional tort and/or engaged in wanton and willful misconduct. In the case National By-Products Inc. v. Searcy House Moving Co., 292 Ark. 491 (1987), the Arkansas Supreme Court found that awarding punitive damages requires evidence that the defendant proceeded intentionally with an unlawful action after knowing that the act was likely to cause injury. This was clarified in D'Arbonne Constr. Co. v. Foster, 354 Ark. 304 (2003).
In the context of agency law, courts may be reluctant to award punitive damages to the principal for the reckless actions of the agent; one exception is when the principal encourages or causes the agent’s recklessness.
Punitive damages are also not typically awarded in the context of a breach of contract claim. See e.g. Lucarell v. Nationwide Mut. Ins. Co., 152 Ohio St. 3d 453 (2018). Some contracts will list certain liquidated damages as a consequence of a breach; however, a court may choose to ignore this clause if the liquidations are actually punitive damages. Each jurisdiction may use different tests to determine whether or not this liquidated damages clause should be applied. For example, Florida uses a two-part test:
- The agreed damages must be a reasonable forecast of just compensation for the harm that is caused by the breach, and
- The harm must be irreparable or immeasurable.
If the clause meets both of these elements, then the court will typically apply the clause, finding no evidence for punitive damages. See: Lefemine v. Baron, 573 So. 2d 326 (Fla. 1991).
For more on punitive damages, see this Justia article on Punitive Damages in Lawsuits and Oyez Supreme Court cases by issue, Punitive Damages.
[Last reviewed in September of 2026 by the Wex Definitions Team]