Question

McKibben, onwer of a mining claim near Fairbanks, Alaska, signed a mining lease agreement with Mohawk Oil that provided that McKibben would recover 45 percent of the value of all ores and minerals mined. When the ore mined had a specified low value, however, McKibben would receive only 10 percent of the value of the ore mined. McKibben discovered that Mohawk Oil was diluting the ore and removing precious metals without reporting this to McKibben as required by the lease. McKibben sued, seeking both compensatory and punitive damages. Can punitive damages be recovered in this breach of contract action? Why or why not?

Answer 1

Punitive damages can’t be recovered in this breach of contract action as the court assumes that the parties upon entering into an agreement are completely conscious or mindful about the dangers and risks involved in the contract (punitive damages are by and large not conferred at all in a breach of contract). But punitive damages can be issued in the contracts involving tort where there has been an attempt to cause deliberate or intentional harm to the plaintiff.