The Award of Punitive and Emotional Distress Damages in Breach of Contract
Cases: A Comparison Between the American and the Brazilian Legal Systems
Patrícia Maria Basseto Avallone *
I. Preface
II. The American System
A. Brief Overview of Some of the Legal Remedies Available for the Parties in Breach of Contract
Cases
B. Punitive Damages
1. Definition
2. The Availability of this Remedy in Contract Cases: The Second Restatement and Special
Cases
C. Damages for Emotional Distress
1. Definition
2. The Availability of This Remedy in Contract Cases: The Second Restatement and Special
Cases
III. The Brazilian System
A. Brief Overview of Some of the Legal Remedies Available for the Parties in Breach of Contract
Cases
1. The Language of the Brazilian Civil Code: Articles 1.056 and 1.059
B. The Brazilian Extra Contractual and Contractual Systems: A Different Result in the Award of
Damages
1. Moral Damages and the Language of Article 159 of the Brazilian Civil Code
2. The Moral Damages: How They Relate to the American Punitive and Emotional Distress
Damages
C. Breach of Contract Cases in which Brazilian Courts Awarded Moral Damages
IV. Summary and Evaluation
I. PREFACE
If someone could describe the goal of contract remedies in the American legal system,
they would say that it is to put the injured party in as good a position as they would have
been had the contract been performed.1 In the Brazilian legal system, it is very likely that
this same goal would alos be described for contract cases.
However, instead of concentrating on the many types of remedies that may be
awarded in breach of contract situations, this Article will present only an overview—of
both legal systems—of some of the remedies available to the parties in breach of contract
cases. Next the Article will discuss punitive and emotional distress damages in breach of
contract situations, establishing a parallel with Brazilian law. More specifically, this
*
L.L.M., University of Miami, Comparative Law (2001); Universidae de Sao Paulo-USP, Brazil
(1999). Patrícia Maria Basseto Avallone practices law is Brazil.
1
See E. ALLAN FARNSWORTH AND WILLIAM F. YOUNG, CASES AND MATERIALS ON CONTRACTS
566 (3d ed. 1980).
Article will discuss the concept of Brazilian moral damages, demonstrating how this legal
remedy relates to the American punitive and emotional distress damages.
The purpose of this Article will be to introduce and discuss the best approaches and
ideas about how to solve these remedial issues. In addition the Article will note, that
private autonomy of parties is an important tool that will be considered as a possibility to
improve the current situation. Thus, this Article comments on the rationales of United
States and Brazillian courts in awarding these special remedies for breach situations.
Moreover, this Article will also endeavor to answer how both legal systems are similar.
In the final analysis, this Article hopes to suggest several mechanisms that could be used
to improve both legal systems when dealing with breach of contracts.
II. THE AMERICAN SYSTEM
A. A Brief Overview of Some of the Legal Remedies Available for the Parties in Breach
of Contract Cases
The usual form of compensating parties for a breach of contract in the American
system is to award a sum of damages that will—to the extent that money can—put the
injured party in the position that he would have been had the promise been performed.2
“Under the common law, this is achieved primarily by awarding damages measured by
the value of the promised performance.”3 One may see that the emphasis here is
pecuniary. The opposite occurs with civil law systems that generally favor specific
performance as a remedy for breach of contract instead of monetary damages.4
What interests are protected by the American courts? Although the answer is not
simple, Professor E. Allan Farnsworth teaches that some interests are protected, among
these interest is the expectation that the injured party had when making the contract.5
Courts protect this interest by attempting to put that party in as good a position as they
would have been in had the contract been performed.6 This is the expectation interest.7 At
other times, a court may enforce a promise by protecting the promisee’s reliance instead
of the promisee’s expectation.8 In this situation, a court may attempt to put the injured
party back in the position that the party would have been had the contract not been
made.9 This is called the reliance interest.10
The purpose here is to undo the harm that the plaintiff’s reliance on the defendant’s
promise has caused.11 However, a court can still recognize a third interest by granting
restitution to the injured party.12 This is known as the restitution interest: when a court
attempts to put the party in breach back in the position that party would have been had
the contract not been made.13 The object here is the prevention of gain—also know as
unjust enrichment—by the defaulting party at the expense of the promisee.14
Another kind of remedy that is available, to the parties in cases of breach of contract,
is specific performance. This remedy, not often invoked in the common law tradition,
allows, within its discretion, a court to order a party in breach to perform the contract. In
2
See id.
Amy H. Kastely, Compensation for Lost Aesthetic and Emotional Enjoyment: A Reconsideration
of Contract Damages for Nonpecuniary Loss, 8 U. HAW. L. REV. 1, 3 (1986).
4
See id. at 3, n.11. Although this exceeds the purpose of this article, it is interesting to note the
difference between the two foci. It is very likely that one cause for this difference is the difficulty that some
civil law systems, Brazil for example, encounter in enforcing judgments, preferring as an alternative,
specific performance.
5
See E. ALLAN FARNSWORTH, FARNSWORTH ON CONTRACTS § 12.1 at 147 (2d ed. 1998)
[hereinafter FARNSWORTH ON CONTRACTS].
6
See id.
7
See id.
8
See id. § 12.1 at 151.
9
See id.
10
See id.
11
See L. L. Fuller & William Perdue, The Reliance Interest in Contract Damages, 46 YALE L. J.
52, 54 (1936) (listing specific examples).
12
See FARNSWORTH ON CONTRACTS, supra note 5, § 12.1, at 152.
13
See id.
14
See id.
3
most instances, this remedy is invoked most often when pecuniary damages are
inadequate.
Having presented some of the legal remedies that are available to parties in breach of
contract situations, two other remedies for breach of contract situations which constitute
the core of this Article—punitive and emotional distress damages—are presented more
deeply below.
B. Punitive Damages
1. Definition
Punitive damages, also called exemplary damages, have been defined as a sum (i.e.
monetary compensation) not designated principally to compensate the plaintiff for
pecuniary loss, but rather to punish the defendant for willful and malicious conduct and
to serve as a deterrent to other potential tortfeasors.15 The purpose of punitive damages is
to make the offending party an example, discouraging others from similar conduct.16 It is
a damage usually identified with criminal sanctions.17 Given the nature and objective of a
punative remedy, it is arguably vailable only in very extreme circumstances.18 Its noninclusive nature is related to many factors.
Courts seem to have understood that this remedy was proper for tort claims and not
contract claims, since the act that caused the obligation to compensate and the objectives
of compensation in these areas are very different. Timothy J. Sullivan discusses this
reason:
The traditional unavailability of punitive damages may be considered simply an accident
of historical development. A part of the explanation may also lie in the fact that parties to
a contract create contractual obligations by an exercise of will; unlike the commission of
a tortious act, failure to discharge these self-imposed obligations does not inevitably
violate objective standards of societal conduct. Since breach of contract usually abuses no
external standard of acceptable conduct, contract damages may be thought to have no
punitive function.19
Similarly, another author explains that contract damages enforce the intentions of
parties, ensure either performance or the payment of compensatory damages, and are
designed to place the victim of the breach in the position that he would have been had
there been no breach.20 By contrast, tort damages are viewed as an instrument of social
policy. It might be said that when tort damages are awarded in contract cases, it seems
15
See Timothy J. Sullivan, Punitive Damages in the Law of Contract: The Reality and the Illusion
of Legal Chance, 61 MINN. L. REV. 207, 207 n.1 (1977).
16
See 28 U.S.C.A. § 1332 (2001). See generally In Re A.H. Robins Co., Inc., 89 B.R. 555 (1988).
17
See 28 U.S.C.A. § 1332 (2001).
18
See Sullivan, supra note 15, at 207.
19
See Sullivan, supra note 15, at 218-19.
20
See Barry Perlstein, Crossing the Contract-Tort Boundary: An Economic Argument for the
Imposition of Extracompensatory Damages for Opportunistic Breach of Contract, 58 BROOK. L. REV. 877,
878 (1992).
that the law imposes duties that go beyond what the parties to the contract may have
intended.21
John A. Sebert presents another reason for the limitation of punitive damage awards in
contract cases in his article, Punitive and Nonpecuniary Damages in Actions Based Upon
Contract.22 He explains that the fear of overcompensating contract plaintiffs is the single
most important basis for the traditional rules against recovery of punitive and
nonpecuniary damages in contract.23 He adds:
[I]t is sometimes asserted that punishment is an inappropriate objective in contract
actions. Moreover, the corollary of not permitting overcompensation and the ensuing
reluctance to award nonpecuniary and punitive damages has been reinforced in recent
years by applying economic theory. Overcompensation of plaintiff and punishment of
defendant for breach of contract, it is asserted, may produce an economically inefficient
allocation of resources.24
Still another reason for courts’ refusal to award punitive damages in contracts is
suggested by the decision of the Texas Supreme Court in Houston & T.C. R.R. Co. v.
Shirley, when the court stated:
The exclusion of such issues [punitive damages] in suits on contract may be justified on
the policy of limiting the uncertainties and asperities attending litigation of such issues, to
that class of cases in which the nature of the wrong complained of renders those issues
and evils to some extent unavoidable.25
No matter what the reasons are for courts to impose such restrictions on the award of
punitive damages, the fact is that this scenario seems to be changing in the American
legal system. The remainder of this Article presents reasoning and analysis used by
American courts for allowing the award of punitive damages as well as comments on the
rationale of the courts, citing some cases deserving this special type of recovery, and
comparing them with what can be found in the Brazilian legal system.
2.
The Availability of This Remedy in Contract Cases: THE RESTATEMENT
(SECOND) and Special Cases
First, the limitation of punitive damages is not absolute. THE RESTATEMENT (SECOND)
OF CONTRACTS states an exception to the rule. Section 355 of the RESTATEMENT
(SECOND) provides that “punitive damages are not recoverable for breach of contract
unless the conduct constituting the breach is also a tort for which punitive damages are
recoverable.”26 According to the RESTATEMENT (SECOND), courts can award punitive
damages in contract cases when the breach is an independent tort for which punitive
damages are available.
21
See id. at 878-79.
See John A. Sebert, Jr., Punitive and Nonpecuniary Damages in Actions Based Upon Contract:
Toward Achieving the Objective of Full Compensation, 33 UCLA L. REV. 1565, 1571-1573 (1986).
23
See id. at 1571.
24
Id. at 1571-72 [footnote omitted].
25
Houston & T.C. R.R. Co. v. Shirley, 54 Tex. 125, 142 (1880), quoted in Sullivan, supra note 15,
at 222 [alteration in original].
26
RESTATEMENT (SECOND) OF CONTRACTS § 355 (1981).
22
However, what are the classic situations in which this damage has been awarded by
the American courts? There seems to be a consensus among many authors who have
explored this theme that the exception to the award of punitive damages is found in
actions for breach of contract to marry.27 Many courts sustain the award of punitive
damages in such cases.28 The justification for this exception, according to Timothy
Sullivan, seems to be based on the peculiar nature of the interests involved in a breach of
a contract to marry: “Because the damage suffered by the plaintiff is often uniquely
personal, the character of the interest abused frequently has much more in common with
a typical tort action than with the standard contract action.”29
Another widely recognized exception to the general rule that punitive damages are not
available in contract, relates to whether public services companies may be answerable in
exemplary damages for failure to discharge obligations to the public.30 The reasons that
justify such an exception are based on the monopoly position that these corporations
enjoy within the community.31 An example of this situation is provided by Sullivan,
citing Ft. Smith & W. Ry. v. Ford, involving a purchaser of a railroad ticket who was not
transported to the proper station.32 Sullivan analyzes the situation by saying:
It was thus the railroad’s breach of duty to the public and not its failure to discharge
obligations assumed by private contract which justified the award of punitive damages.
By characterizing the plaintiff’s action as one for tortious breach of a public duty, the
courts were able to permit these recoveries without seeming insult to the general rule
that such awards were not appropriate in contract actions.33
Sullivan also points out that in public service corporations cases, it is accepted that
there may arise a breach of duty independent of contractual relations; also that a
defendant has usually been guilty of conduct which constitutes the abuse of economic
power independent of the defendant’s status as a party to a contract.34 Thus, the position
of the party within the community and the power that this party are important factors that
are considered by the courts. The focus in these situations is less on the failure to perform
a contract than that a public company’s breach of the contract which potentially affects a
large segment of the community.
Another exception involves cases where the relationship between the parties is of a
fiduciary character.35 For example, in the public services cases, Sullivan explains that “it
is the breach of duty created by the relationship rather than the contract which is said to
permit the recovery of punitive damages.”36 In support of this conclusion, Sullivan cites
Brown v. Coates, when in a broker and homeowner relationship, the court awarded
27
See Sullivan, supra note 15, at 222.
See id. at 223.
29
Id. at 223 [footnote omitted].
30
See id.
31
See id. at 224.
32
See Sullivan, supra note 15, at 224-25 citing Ft. Smith & W. Ry. v. Ford, 34 Okla. 575, 578,
126 P. 745, 746 (1912).
33
Id. at 225.
34
See id. at 226.
35
See id.
36
Id.
28
punitive damages to the homeowner, justifying the award on the ground that real estate
brokers assume fiduciary obligations toward their clients.37
In addition, when the defendant’s conduct is deemed fraudulent, many jurisdictions
recognize an exception to the award of punitive damages.38 Courts, however, disagree
about what specific fraudulent act gives rise to punitive damages.39 Instead, these
situations must be analyzed on a case-by-case basis.
Another exception relates to cases when the breach of contract is accompanied by an
act that is independent and willfully tortious.40 Country Club Corp. v. McDaniel
summarizes this position:
Generally, punitive damages are not recoverable for breach of contract; but where the
acts constituting a breach of contract also amount to a cause of action in tort, there may
be recovery of exemplary damages upon proper allegations and proof of intentional
wrong, insult, abuse or gross negligence constituting an independent tort.41
Another case that deals with the difficulties of a distinction between torts and contracts
is Boise Dodge, Inc. v. Clark.42 In this case, plaintiff purchased a new automobile from
the defendant, but the new automobile was, in fact, a well-used demonstrator shown to
have had the odometer turned back.43 The plaintiff received punitive damages and the
court stated:
The rule . . . is that punitive damages may be assessed in contract actions where there is
fraud, malice, oppression or other sufficient reason for doing so. The rule recognizes that
in certain cases elements of tort, for which punitive damages have always been
recoverable upon a showing of malice, may be inextricably mixed with elements of
contract in which punitive damages generally are not recoverable.44
Finally, Sullivan states that courts have sustained the award of punitive damages in
breach of insurance contract cases.45 Courts in other states have relied upon the California
Supreme Court case of Gruenberg v. Aetna Insurance Co. “as an aid in establishing an
implied duty of good faith as a condition for awarding punitive damages in an action
growing out of contract.”46 According to Sullivan, under the rationale of these cases, the
plaintiff who has suffered some damage due to the defendant’s abuse of superior
bargaining power will also recover punitive damages.47
37
See Sullivan, supra note 15, at 227 citing Brown v. Coates, 253 F.2d 36, 102 U.S. App. D.C.
300 (1958).
38
See id. at 229.
39
See id. at 230-236 (for a discussion of the complex and confusing historical evolution of fraud
and analysis of cases in which fraudulent conduct is alleged as a basis for the recovery of punitive
damages).
40
See id. at 236.
41
Country Club Corp. v. McDaniel, 310 So. 2d 436, 437 (Fla. Dist. Ct. App. 1975), quoted in
Sullivan, supra note 15, at 236 n.149.
42
See Boise Dodge, Inc. v. Clark, 92 Idaho 902, 453 P.2d 551 (1969).
43
See id.
44
Id. at 556.
45
See Sullivan, supra note 15, at 241.
46
Id. at 242.
47
See id.
C. Damages for Emotional Distress
1. Definition
Damages for emotional distress, also called damages for mental anguish, are damages
caused to a person’s complex set of feelings.48 It is the burden or inconvenience that
certain conduct causes a person that creates the right to receive nonpecuniary recovery.49
It is a damage that reaches the subjective sphere of a person and cannot be translated into
monetary terms.50 Most often this might be charachterized as is emotional pain and
suffering.
As with punitive damages, damages for emotional distress in breach of contract cases
are rare. Similar to the trend with punitive damages, the award of emotional distress
damages also seems to be changing. However, it is important to note that the American
courts, when dealing with the award of emotional distress damages for breach situations,
do not have an absolute restriction as they have with punitive damages. This distinction is
based on the non-punitive nature of emotional distress damages as deemed by the courts.
2. The Availability of This Remedy in Contract Cases: THE
RESTATEMENT(SECOND) and Special Cases
Damages for emotional distress may be awarded when a breach also caused bodily
harm or when the contract or breach is such that serious emotional disturbance was a
particularly likely result.51 The language of the RESTATEMENT (SECOND) seems broader
when dealing with emotional distress situations than when with punitive damages.
Because of this and because emotional disturbance is a foreseeable result in many
contracts and breaches, it is possible to say that emotional distress damages are more
likely recognized and awarded by the courts—in contract situations—than that of
punitive damages.
What are the circumstances that allow the award of emotional distress damages? Two
of the most important exceptions involve misdelivered telegraph messages and morticians
guilty of mishandling corpses.52 For example, a widow hired some persons to conduct the
48
See 42 U.S.C.A. § 3613 (2001).
See 46 App. U.S.C.A. § 762 (2001).
50
See 42 U.S.C.A. § 3613 (2001).
51
See RESTATEMENT (SECOND) OF CONTRACTS § 353 (1981) (further providing that recovery for
emotional disturbance will be excluded in the absence of the circumstances just described).
52
See Douglas J. Whaley, Paying for the Agony: the Recovery of Emotional Distress Damages in
Contract Actions, 26 SUFFOLK U. L. REV. 936, 940 (1992). The author states:
49
Most courts will not allow recovery for emotional injury without some accompanying physical
injury. The major exceptions involve misdelivered telegraph messages and morticians guilty of
the mishandling of corpses. . . . One major treatise has stated that “[w]hat all of these cases
appear to have in common is an especial likelihood of genuine and serious mental distress,
arising from the special circumstances, which serves as a guarantee that the claim is not
spurious.
Id. [alteration in original]. [footnotes omitted].
funeral of her deceased husband and to handle his corpse.53 She also alleged a contract
was formed to furnish a casket and a watertight vault.54 When these persons failed to lock
the vault allowing water and mud to enter the vault, a claim for breach of contract (and
breach of warranty in the sale of a vault) followed.55 Based on this breach, the court
awarded damages for mental anguish, applying the principle that:
Where the contract is personal in nature and the contractual duty or obligation is so
coupled with matters of mental concern or solicitude, or with the sensibilities of the
party to whom the duty is owed, that a breach of that duty will necessarily or
reasonably result in mental anguish or suffering, and it should be known to the parties
from the nature of the contract that such suffering will result from its breach,
compensatory damages therefore may be recovered.56
Amy H. Kastely explains that courts allow such compensation when the dispute
involves a “personal” contract as distinguished from a “commercial” one.57 The author
adds that this exception is applied to a narrow class of contracts, including contracts for
the provision of funeral or burial services, promises of marriage, and contracts involving
personal transportation or hotel accommodation.58 The award is present in situations
when the terms of a contract relate to matters that directly concern “the comfort,
happiness, or personal welfare of one of the parties, or the subject matter of which is such
as directly to affect or move the affection, self-esteem, or tender feelings of that party,
[that] he may recover damages for physical suffering or illness proximately caused by its
breach,”59 or where deep personal human relations are involved.60
Another class of cases when emotional distress damages are awarded, are cases when
a breach also caused bodily harm. For instance, courts say that damages for worry and
mental excitement based on breach of a contract of marriage will not be given for mere
inconvenience if there is no actual physical or mental injury.61 The reasoning relates to
the element of certainty, most likely because it is easier to measure damages when a
concrete element exists—such as a body injury. Thus courts are willing to require actual
or physical harm.62 Here, it is important to note that the requirement of physical injury in
order for the possibility of the award of emotional distress damages to exist is one extant
in the field of torts, with the name of the impact rule.63 This rule is pointed out by Joseph
P. Tomain, who adds that there is no logical reason to keep such a requirement in contract
law.64
53
See Lamm v. Shingleton, 55 S.E.2d 810, 812 (N.C. 1949).
See id.
55
See id.
56
Id. at 813 [citations omitted].
57
See Kastely, supra note 3, at 14-15.
58
See id. at 15.
59
Westervelt v. McCullough, 228 P. 734, 738 (Cal. Ct. App. 1924).
60
See Chrum v. Charles Heating & Cooling, Inc., 327 N.W.2d 568, 570 (Mich. Ct. App. 1982).
61
See, e.g., Turner v. Great N. Ry. Co., 46 P. 243, 245-46 (Wash. 1896).
62
See Joseph P. Tomain, Contract Compensation in Nonmarket Transactions, 46 U. PITT. L. REV.
867, 897 (1985).
63
See id. at 896-97.
64
See id. at 897.
54
Acts accompanying a breach of contract that are willful, insulting, reckless, or wanton
also deserve emotional distress liability. For example, Kastely notes that the Supreme
Court of Hawaii,
[f]ound that the defendants engaged in wanton or reckless conduct when they
surreptitiously negotiated with a third party, made numerous representations to the
plaintiffs that they would comply with their lease agreement, and falsely denied that
they were negotiating with another party, all with knowledge that the plaintiffs had
expended money and effort in reliance on their promise of a lease for a restaurant in the
Pearlridge Shopping Center.65
Thus, “the rationale for allowing emotional distress damages in cases like Chung v.
Kaonobi is generally that the wanton or reckless conduct itself constitutes a tort or at least
a fusion of contract and tort.”66 Once more, one may see the influence of tort law in the
field of contract law as well as the difficulties legislators, scholars, and judges apparently
have keeping these fields in separate spheres.
Courts are also allowing recovery of damages for mental anguish or emotional
distress for a breach of a contract to perform cosmetic or plastic surgery. A case that
deals with this theme is Sullivan v. O’Connor.67 In this case, a plaintiff sued the
defendant surgeon on two counts.68 In the first count, she alleged that she entered into a
contract with the defendant, wherein he promised to perform plastic surgery on her
nose—thereby enhancing her beauty and improving her appearance. The doctor
performed the surgery but failed to achieve the promised result; rather, the result of the
surgery was disfigurement and deformity to the plaintiff’s nose, causing her pain to body
and mind.69 The second count was in the conventional form for malpractice.70 The court
decided that the plaintiff was entitled to recover for the worsening of her condition and
for the pain, suffering, and mental distress involved in the third operation.71 The court
stated:
We find expressions in the decisions that pain and suffering (or the like) are simply not
compensable in actions for breach of contract. . . . True, if the buyer under a contract
for the purchase of a lot of merchandise, in suing for the seller’s breach, should claim
damages for mental anguish caused by his disappointment in the transaction, he would
not succeed; he would be told, perhaps, that the asserted psychological injury was not
fairly foreseeable by the defendant as a probable consequence of the breach of such a
business contract. . . . But there is no general rule barring such items of damage in
actions for breach of contract. It is all a question of the subject matter and background
of the contract, and when the contract calls for an operation on the person of the
plaintiff, psychological as well as physical injury may be expected to figure somewhere
in the recovery, depending on the particular circumstances.72
65
Kastely, supra note 3, at 14 citing Chung v. Kaonobi, 618 P.2d 283, 289 (1980).
Id. (footnotes omitted).
67
See Sullivan v. O’Connor, 296 N.E.2d 183 (Mass. 1973).
68
See id. at 184.
69
See id.
70
See id.
71
See id. at 189.
72
Id. at 188-89 (emphasis added). For another small category of cases where courts are allowing
the recovery of emotional distress damages, see contract cases that have the gratification of some
intellectual enjoyment.
66
Amy H. Kastely explains why courts refuse to award damages based on sentimental
value in contracts when issues involve special emotional value to the promisee (for
example, contracts to take wedding pictures).73 One reason is that courts cannot easily
translate emotional value into monetary terms.74 Another reason is that emotional and
aesthetic values represent either base materialism or idle triviality, both of which should
be discouraged.75
Another very interesting explanation is provided by Joseph P. Tomain who criticizes
the overlap between contract and tort law.76 Tomain states that while tort law is an
attempt to compensate an injured plaintiff—thereby forcing the defendant to conform his
or her behavior to a set of duties and obligations which are socially defined—contract law
is less concerned with the conduct of the defendant-promisor than with the manifest
intentions of both parties in entering the contract.77 He also points out that contract
damage rules concentrate on certainty, predictability, and objectivity, and these rules are
useful for facilitating commercial transactions.78
However, Tomain adds that a right to damages for nonpecuniary harms does not
ignore the market model of contracts.79 On the contrary, this right is justified because
certain contracts are entered primarily for nonpecuniary motives that should be
honored.80
III. THE BRAZILIAN SYSTEM
A. Brief Overview of some of the Legal Remedies Available for the Parties in Breach
of Contract Cases
1. The Language of the Brazilian Civil Code: Articles 1.056 and 1.059
In the Brazilian legal system, breach of a contract creates an obligation to compensate
an injured party by placing a party in the position that they would have been had the
contract been performed. The breach imposes the payment of losses and damages (perdas
e danos) that has the objective of maintaining the promisee’s status quo ante, or, in other
words, to maintain the situation that they would have been had the breach not occurred.
As described above, the goal is very similar to American contract law.
The Brazilian solution for breaches of contracts is found in its Civil Code. There,
Articles 1.056 and 1.059 deal with this question. Article 1.056 provides that a party that
does not execute (perform) an obligation or fails to perform it in the manner and time due
will be liable for losses and damages.81 Article 1.059 complements Article 1.056
providing that the losses and damages due to the creditor include all that the other party
73
See generally Kastely, supra note 3.
See id. at 8.
75
See id. at 9.
76
See Tomain, supra note 62, at 897-99.
77
See id.
78
See id. at 898.
79
See id. at 899.
80
See id.
81
See Código Civil [C.C.] art. 1.056.
74
effectively lost with the breach of the contract (damnus emergens) and all that she was
restrained from gaining also due to the breach (lucrum cessans).82
A Brazilian author adds that the damnus emergens must be real, estimated in an
objective way, without taking into account the affective value of the goods lost, unless
there are some very special circumstances.83 The value of the lucrum cessans must be
demonstrated through objective, concrete elements, meaning that a mere probable
damage will not warrant compensation.84 One must bear in mind that in this sphere of
liability regime, the fault element is essential for the recovery. Some other articles in this
same section of the Brazilian Civil Code deal with situations when a performance is
excused for special reasons.85
Another interesting provision that can be found in the Brazilian Civil Code (Art.
1.059, single paragraph) stipulates that a debtor failing to pay in the time and manner due,
will be liable only for the gains, which were or could have been foreseeable at the time of
the obligation.86 This type of provision may also be found in American law—when
damages for emotional distress are limited to the types of loss foreseeable at the time of
the contract formation.
For instance, in the American system, the foreseeability rule limits the award of
damages to those that were predictable. In the Brazilian system, on the other hand, the
foreseeability rule serves both to differentiate breach (non-performance) from mere
unpunctuality—a situation of delay and not of absolute breach—and to limit the award of
damages in these two occasions. Thus, in the case of a mere delay (mora) the liability is
limited to the recovery of the losses and gains foreseeable, while in a situation of total
breach (inadimplemento contratual), the recovery includes even the unforeseeable losses
and gains.
Another legal remedy in the Brazilian system as a solution for breach is specific
performance. As in the American system, specific performance means that the defaulting
party may be forced to perform the object of the contract, instead of paying a sum of
money. The Brazilian Civil Procedure Code provides the rules that regulate this remedy.
Finally, another useful and interesting device that functions as a kind of a remedy for
breaches is called penal clause (cláusula penal). The penal clause is a stipulation created
by the parties in a contract regarding the possibility of non-performance. A penal clause
is said to have two functions. Firstly, it serves as a compelling device for the execution of
the obligation. Thus, the clause works as a real sanction, specifically a fine, compelling
the debtor to perform his obligation, instead of breaching. But its second function is
really the most interesting as it represents a stipulation of the value of the total losses and
damages brought by the parties themselves.
82
See C.C. art. 1.059.
See ARNOLDO WALD, OBRIGAÇÕES E CONTRATOS [OBLIGATIONS AND CONTRACTS], 86 (6th ed.
1983). [The word affective as used by the author here means the personal, subjective value that a good may
have, like a very special object that someone receives as a gift].
84
See id.
85
Here it is interesting to note that as occurs in the American system, there are occasions that a
party may be relieved from her obligations, but the discussion about this similarity exceeds the object of
this Article and will not be treated.
86
See C.C., supra note 82.
83
A penal clause permits parties to avoid the delays and costs of litigation (in
determining the amount of losses, for example) since parties can demand directly the
value that is in the contract, and according to the parties’ stipulation, correspond to the
total amount of the losses and damages suffered. Surely, this device is imperfect because
parties may underestimate potential losses; however a penal clause figure is described
here because one of the goals of this Article is to analyze whether or not parties can
facilitate and improve the judicial role by stipulating remedies for breaches of contracts.
The description provided above is sufficient to give the reader an idea of the remedies
available in the Brazilian system for breach situations. This Article will concentrate on
the possibility of moral damages being awarded in breach of contract cases. This theme si
emphasized both because of the importance of this remedy in providing a fair and just
system
of
compensation
to
a
creditor,
and
because
every day breaches of contract constitute an offense to the moral patrimony of the
persons, instead of a mere offense to their pecuniary interests.
B. The Brazilian Extra Contractual and Contractual Systems: A Different Result in the
Award of Damages
1. Moral damages and the Language of Article 159 of the Brazilian Civil Code
Before one may analyze the relationship between moral damages, and punitive and
emotional distress damages, a definition of moral damages must be provided. Moral
damages may be defined, among the many definitions that exist, as injuries sustained by a
determined party in her ideal patrimony, this ideal patrimony being explained as
something in opposition of the idea of material patrimony. It is everything that does not
have an economic value. It is the pain, the hurt, the suffering that a party unjustly causes
to another.87
Moral damage recovery is largely awarded in the extra contractual liability sphere.
This is the tort scenario in opposition to the contractual liability, which involves breach
of contracts. It is relevant to explain the differences between these two liability regimes
not only because of the similarities that they seem to have with the liability regimes under
American law, but also because they produce different measures of damages.
A person may provoke a loss to another party by violating a contractual obligation.
When such a situation occurs, the liability is said to be a result of a contractual violation,
and as a result, the contractual liability regime arises.
On the other hand, when a person performs an illegal act and damages someone else,
and this damage is not the result of a contractual violation, the extra contractual regime
appears. In this situation, it is important to realize the lack of existence of a legal
relationship between the parties. While Article 1.056 of the Brazilian Civil Code deals
with the effects from the violation of the terms of a contract, Article 1.059 deals with the
effects of an extra contractual violation. Article 1.059 of the Brazilian Civil Code
87
See 4 SILVIO RODRIGUES, DIREITO CIVIL, RESPONSABILIDADE CIVIL [CIVIL RIGHTS, CIVIL
RESPONSIBILITY], 188 (14th ed. 1995) citing WILSON MELLO DA SILVA, O DANO MORAL E A SUA
REPARAÇÃO [MORAL DAMAGES AND THEIR REMEDIES], 1955 n.1.
provides that whoever, by voluntary act or omission, negligence, or imprudence violates
a right or causes injury to another person, is obliged to repair the damage.88
Despite the clear difference in treatment of the two liabilities, there are some authors
in Brazil that criticize this dual system, saying that the effects of them are the same, as
are the requirements for a liability (contractual or not) to arise: the injury, the illegal
practice and the causation. However, many are the differences between the two species
of liability.
One difference relates to the burden of proof (onus probandi). In the case of
contractual liability, the creditor, in order to receive compensation, has to demonstrate
only that an obligation was not performed. In the sphere of extra contractual liability,
however, the creditor must demonstrate that the act or omission occurred because of a
negligence, imprudence [fault] of the debtor in order to receive compensation. As one
might see, the first of the regime—contractual—presents a greater opportunity for the
creditor to be compensated, since he does not have to prove fault.89
Another difference concerns the capacity of the person that caused the injury. Some
authors understand that this capacity is broader in the extra contractual sphere than it is
in the contractual one. The example for this situation is an act committed by a minor.
While in the case of extra contractual liability a minor’s act may give rise to the duty of
indemnity—by the parties responsible for this minor—in the contractual sphere, the
minor will be liable (and will have the duty to compensate the other party) only if he, at
the time of the contract formation, was assisted by a legal representative.
The result is that in the extra contractual liability regime the possibilities of
compensation are broader. Technically speaking, the rule is that no moral damages will
be awarded in breach of contract situations. However, Brazilian authors disregard this
rule stating, with little support, that moral damages may be awarded in these
circumstances. It is interesting to note here that courts do not follow such straightforward
statements.
A analysis of the terms in Articles 1.056, 1.059, and 159 sufficiently shows that
compensation is broader in the extra contractual regime than it is in the contractual one.
Such a conclusion is possible because while the first two articles delimit the remedies for
the non-performance of an obligation in losses and damages, Article 159 provides that
there is an obligation to repair the damage, without saying what damages are included in
this compensation.90 Here, there is no provision establishing what damages are included,
which is found in article 1.059 on contractual breach.
So, faced with the provocative question why the award of damages is broader in the
extra contractual liability than in the contractual liability, I will present the remedies that
the Brazilian courts are awarding for contractual breach cases. This Article attempts to
demonstrate that in the extra contractual regime the remedies are broader because these
are tort situations. As we know, authors, legislators, judges attempt to separate the tort
and the contractual fields. In doing so, practitioners are unanimous in recognizing that the
tort sphere, because it involves more serious offenses, deserve a broader recovery.
However, the ideal of separating these two fields was not reached by the Brazilian nor
88
89
See C.C. art. 159.
See CARLOS ROBERTO GONÇALVES, RESPONSABILIDADE CIVIL [Civil Responsibility], 23 (6th
ed. 1995).
90
See C.C. art. 159.
American systems. On the contrary, because there is confusion between the delimitations
of these two fields, it might be suggested that contract cases only deserve special
damages (e.g., moral, punitive and emotional distress damages) when the circumstances
involved are nearly tort situations.
2. The Moral Damages: How They Relate to the American Punitive and Emotional
Distress Damages
The Brazilian Civil Code was in large part influenced by the French or Napoleonic
Civil Code. Although it is unclear whether the expression moral damages was taken from
the French Civil Code, the code’s definition provides a similar concept used and
understood by the Brazilian courts:
In the French tradition, the expressions dommage moral and prejudice moral are
commonly used to designate damage inflicted to interests or assets that are not exactly
patrimonial. . . . There is no semantic obstacle to borrowing from the French tradition and
speaking of “moral damages” to mean damage that cannot be technically viewed as
sustained by a person’s patrimony, or damage to an interest for which a current marketvalue cannot be readily ascertained, as is always the case when the injury sustained
consists, in whole or in part, in the experience of a negative state of emotional distress.91
As stated above, the expression, moral damages, is used by the Brazilian system.
Thus, moral damages are damages inflicted to interests that are not patrimonial, but rather
personal. The above quote uses the expression personal patrimony in defining moral
damages. In this context, personal patrimony can be understood as damages sustained by
the individual, reaching everything that relates to that person. It is a damage to feelings, it
is a pain, a suffering. It is something that reaches a person, an individual and not
patrimonial, pecuniary interests.
As a consequence, comparing the definition of moral damages with that of damages
for emotional distress, Brazilian moral damages correspond to the American emotional
distress damages. A main difference is that while the Brazilian system accepts the idea
that a moral damage does not require a physical injury, the American system seems to
insist on the idea that a physical injury must occur for a person to sustain emotional
distress damages. This idea is related to the elements of predictability and certainty—here
concerning how the damage will be measured and how courts conclude that emotional
pain exists without physical manifestation—and the approach that tort law gives to
emotional distress damages.
Nowadays, it seems to be very clear that it is absolutely possible for a person to sustain
a moral damage or an emotional distress damage even without a physical manifestation.
Brazilian courts are tending to see these damages in a similar manner.
However, Brazilian courts do not agree that moral damages serve as a punishment to a
party. In other words, they do not agree that moral damages can be used as a type of
punitive damage. This occurs because many authors state that only criminal law is apt to
punish, and not civil law, which has the goal of compensating a party. Even though the
use of moral damages acts as a kind of deterrence, punishment is not rare in the Brazilian
courts. To the contrary, one may find in the Brazilian system moral damages are both a
91
Saul Litvinoff, Moral Damages, 38 LA. L. REV. 1, 1 (1978).
remedy for compensation (such as emotional distress damages) and an element of
deterrence or punishment (a characteristic that is present in punitive damages).
I would say that while moral damages, in my opinion, are very similar to emotional
distress damages, one can hardly deny that a moral damage also functions as a kind of
punishment, as an element of deterrence, to prevent the practices of similar illegal
conduct. Thus, moral damages have characteristics of emotional distress damages and
those of punitive damages. In other words, moral damages serve both: (1) as a
compensation to the victim; and (2) as a punishment to the offender. Having concluded
that moral damages have the characteristics of both American punitive and emotional
distress damages, this Article turns to the possibility of moral damages being awarded in
breach of contracts cases.
Silvio de Savio Venosa says that the merely moral damages must be recovered, citing
the Brazilian Constitution, Article 5o., V, which provides that the right of reply is ensured
in proportion to the offense, as well as compensation for property or moral damages or
for damages to the image.92 At this point, it is relevant to note that an award of moral
damages in Brazil is authorized by the Brazilian Constitution and is also the result of case
law. The Brazilian Civil Code does not mention specifically the possibility of awarding
moral damages for contractual or extra contractual situations. Silvio de Savio Venosa
also points out that the refusal to contract may cause a situation of personal
embarrassment, creating the moral damage.93 But in relation to the award of moral
damage to a contractual violation he says that, generally speaking, the violation (nonperformance) of a contract does not cause a moral damage, because the moral damage is
something that does not relate to the economical patrimony, but affects the mind and
reputation of a person.94 Summarizing, he says that there is a contradiction between the
doctrine and the jurisprudence, the first announcing the possibility of the award of moral
damages in a breach of contract case, and the second denying such a possibility.95
This conclusion about the conflict between the doctrine and the jurisprudence well
summarizes the treatment of this theme in the Brazilian system. While many authors,
among them, Pontes de Miranda, Yussef Cahali, and Carlos Alberto Bittar, defend and
announce such a possibility of moral damages in breach of contract situations, case law
seems to be more careful when it deals with this same issue.96
Contrary to what occurs with some other systems, the Brazilian system does not deal
with the possibility of recovery of moral damages in contractual cases in its provisions,
more specifically, in its Civil Code.97 Moreover, while there is a completely settled and
92
See 2 SILVIO DE SALVO VENOSA, DIREITO CIVIL, [CIVIL RIGHTS] 427 (2001)(citing Constituição
Federal [C.F.] [Constitution] art. 5.)
93
See id. at 427.
94
See id. at 236.
95
See id. at 236-237.
96
See YUSSEF CAHALI, DANO MORAL [Moral Damages], 462 (2d ed. 1999) citing PONTES DE
MIRANDA, TRATADO DE DIREITO PRIVADO [TREATMENT OF PRIVATE RIGHTS], § 3.108. In the Brazilian
system, despite the absence of an explicit provision, the doctrine is uniform about the admissibility of
moral damage recovery in contractual situations and also in cases where the liability derives from an illegal
act. Since the moral damage is a possibility, this distinction makes no sense.
97
See id. at 461. In the Argentine System, the recovery of a nonpecuniary damage in contract
cases can be found in its Civil Code: “En los casos de indemnizacion por responsabilidad contractual el
juez podra condenar al responsable a la reparacion del dano moral que hubiere causado, de acuerdo a la
unquestionable certainty about the possibility of such recovery in the extra contractual
sphere, the award of moral damages is very problematic in the contractual sphere.98
However, it is interesting to realize that the Brazilian Civil Code does not deal, in an
explicit way, with this possibility in extra contractual situations. But here, maybe because
of the broad language of the terms of Article 159 (and also because we are in the tort
scenario) the possibility of awarding moral damages for such situations is not debatable.
The following is an analysis of cases Brazilian courts decided that moral damages
should be awarded.
C. Breach of Contract Cases in which the Brazilian Courts Awarded Moral Damages
There are numerous example when Brazilian courts have awarded moral damages. For
example, a photographer violated a contract to take pictures at a wedding and when he
failed to appear to take the pictures. The Court of Appeals [Tribunal de Justica do Rio
Grande do Sul] found that the photographer should compensate the other party for the
losses and for the nonpecuniary damages derived from his breach of contract and
awarded moral damages.99
Another situation in which a Brazilian court awarded moral damages occurred when a
company responsible for and specialized in the development of films, received the film of
a wedding, damaged the film, making impossible the developing of the film. The Court
of Appeals held that the injured party should recover moral damages.100
Another common circumstance giving rise to moral damages occurs in plastic surgery
cases. Brazilian courts recognize that moral damages must be awarded when someone’s
appearance becomes worse following surgery. Courts reason that this kind of contract is
one in which the surgeon has the obligation to reach a positive result. When this positive
result does not happen, a contractual violation occurs, creating the obligation to
compensate the other party for the moral damages suffered. Moreover, this obligation
arises because a party in suffering difigurment is suffering and experiencing a moral grief
that most likely will exist for the rest of her life.101
Here, the Brazilian system, including both legislators and courts, provided further
legal remedy beyond case law. The Brazilian Civil Code contains a provision providing
that in case of injury or offense to someone’s health, the offender will pay the expenses
for the treatment and also the lucrum cessans until the end of the convalescence, plus a
payment for the criminal act corresponding to the injury.102 The first paragraph of this
code provision adds that the payment of the fine for the corresponding criminal act will
be doubled if a physical deformity resulted because of the injury.103 For instance, when a
part of a person’s hand was injured and this party brought an action asking for the
indole del hecho generador de la responsabilidad y circunstancias.” CÓD. CIV. art. 522 [Código Civil
Argentina] [translation provided by author].
98
The possibility of recovery of moral damages in extra contractual cases is really unquestionable
in the Brazilian Law. Thus, not discussed.
99
TJRS, REO No. 590064036, Relator: Ruy Barbosa de Aguiar Jr., 02.10.1990.
100
See Cahali, supra note 96, at 532 n.131.
101
See RJTJSP 65/174 (Tribunal de Justiça do Estado de São Paulo awarded moral damages in a
plastic surgery case).
102
See generally C.C. art. 1.538.
103
See generally C.C. art. 1.538, para. 1.
payment of a new reparatory surgery, the Court of Appeals said that this surgery could
reduce the aesthetic damage, but never compensate it completely.104 The victim of the
offense, even if the prosthesis is perfect, will always be aware of its artificiality, and this
represents suffering, loss of the self-esteem, lack of confidence, and retraction in social
relationship, summarizing many occurrences that represent the moral damage.105
In the Brazilian system, it is not uncommon to find cases where a party that suffered a
serious and permanent physical deformation receives compensation for the aesthetic
damage and also another one for the moral damage.
Another occasion in which the obligation to repair moral damage appears is in cases
of breach of contract to marry. For example, two parties were engaged for a long time,
and days before the wedding, the defendant said that he did not want the marriage
anymore. Moral damages were awarded to the plaintiff.106 In these circumstances, the
doctrine says that the award of moral damages is authorized by the terms of Article 159
of the Brazilian Civil Code, which provides that the injury must be repaired. Both moral
and pecuniary damages are included in these code provisions. Moreover, in these cases,
there is also the idea that the illegal act gives rise to the obligation to compensate the
other party. In other words, the liability for breach of contract to marry is under the rule
of illegal act, the extra contractual liability and not the contractual one.
In addition, cases of mishandling corpses also give rise to moral reparations. However,
it is not clear whether this obligation to repair the moral damage derives from the contract
or from the performance of an illegal act. For instance, an employee of a cemetery
erroneously removed the corpse plaintiff’s son, allowing another person to be buried
there. The Court of Appeals held that this proceeding constituted, at least, an illegal act,
making the cemetery responsible for the act, and awarded moral damages.107
Another very interesting category of cases that presents the duty to repair moral
damage occurs in breach of contracts for transportation. Brazilian scholars recognize that
in these cases there is a contractual liability, regulated by the terms of Article 1.056 of the
Brazilian Civil Code. This contract, according to the doctrine, is an adhesion contract.
For example, the party that rides a bus makes an adhesion contract with the carrier
company. The payment of the ticket concludes the contract that creates to the carrier the
responsibility to take the passenger to his final route without any injury. An accident in
the middle of the course causes a contract violation, creating the duty to compensate the
other party according to the terms of article 1.056 of the Brazilian Civil Code.108 Here,
the responsibility of the carrier is objective. The party that suffered an injury does not
need to demonstrate the fault of the carrier, only the transport and the injury. Through
this theory, the carrier has the final obligation to transport the passenger without causing
104
See Cahali, supra note 96, at 223.
See id.; see also Tribunal de Alçada do Rio Grande do Sul, 2º Grupo de Câmaras, 25.03.1983,
maioria, Ajuris 29/67.
106
See Cahali, supra note 96, at 656 citing TJSP, REO No. 236.522-1, Relator: Luiz de Azevedo,
08.11.1995. See also TAMG, REO No. 200.791, 07.08.1996.
107
See 5ª Camara do Tribunal de Justica de São Paulo, 23.06.1977, RJTJSP 47/59. See generally 6ª
Camara do Tribunal de Justica do Rio de Janeiro, 01.10.1981, RT 559/192; see also 1ª Camara do Tribunal
de Justica de Minas Gerais, 21.04.1987, RT 639/159.
108
This idea that a contract of transportation is regulated by article 1.056 is quite common. See
CARLOS ROBERTO GONÇALVES, RESPONSABILIDADE CIVIL, 215 (6th ed. 1995).
105
him any kind of injury. When the carrier fails in this obligation, the breach of the contract
arises.
Legal doctrine and case law in the transportation cases seem to be in agreement that
this is a typical contractual situation. However, in these situations when there is the death
of a passenger, courts are unanimous in awarding moral damages for the death of that
person, for the moral suffering that the relatives sustained. In this situation, the award of
moral damages seems to be the result of the death itself and not of the breach of the
contract. For example, a mother brought an action pleading the award of moral and
pecuniary damages suffered because of her son’s death in a train accident in which he
was being transported almost outside the train, hanging on its door.109 The Superior
Tribunal de Justica110 of Brazil, held that the carrier company had a contractual duty to
transport in a safe condition its passengers, and that a breach of this duty creates an
obligation to compensate the party for all the damages sustained by the victim.111
In this case, while the court discussed the responsibility of the carrier company, they
awarded the moral damages without explaining the reasons why this recovery should
follow.112 Decision’s of similar reasoning are common, and in the example the award of
moral damages seems to be an attempt by the courts to minimize the parent’s suffering in
consequence of their son’s death, being clear that money cannot substitute the loss of a
son, but it can, at least, serve as compensation for the pain suffered.
In addition, it is worth mentioning that courts have found court, analyzing moral
damage as a type of punitive damage, that compensation of moral damages have two
objectives: recompose happiness and punish those that without any reason disturb the
normality of life by creating despair and disappointment.113 Yussef Said Cahali,
commenting on this precedent notes that the punishment character of awards is
emphasized by the compensation for moral damage because its objective is to
compensate with money the suffering caused, but also to impose a punishment to the
person that caused the damage.114
Finally, another decision dealing with the award of moral damages dictates that (1) the
victim of such damage must receive a sum that compensates pain and suffering, (2) the
sum must be fixed by the judge, and (3) the judge will make a case-by-case analysis—
taking into account the economic situation of the offender and the personal situation of
the victim. Such precedent adds that in no case, may the compensation be exaggerated,
representing a possibility of unjust enrichment of one party at the expenses of the other or
so insignificant as to represent nothing.115 In each of these opinions it is possible to
realize clearly the role that moral damages would have as a punishment to the offender.
A another question that arises is why courts allow such recovery in these above
described contractual situations, but did not allow this in other contractual cases? Or, put
in other terms, why do some contract cases in Brazil deserve a special recovery while
109
STJ, REO No. 23.351-7-RJ, Relator: Min. Sálvio de Figueiredo Teixeira, j., 01.09.1992.
The highest court of appeals responsible for the analysis of all the cases that do
not involve constitutional matters.
110
111
See id.
See id.
113
See JTARS 97/317, 6ª Câmara do Tribunal de Alçada do Rio Grande do Sul (TALçRS),
19.10.1995; see also Cahali, supra note 96, at 265 n.185.
114
See Cahali, supra note 96, at 265.
115
TJRS, REO 597.118.926-Lajeado-RS, Relator: Araken de Assis, j. 07.08.1997.
112
others do not? Given these questions, it is important to cite a Brazilian Superior Tribunal
de Justica case when the court decided that a breach of contract creates the obligation to
repair the pecuniary damages, not the moral damages, since moral damages need more
than a mere contrariety in a business negotiation.116 The reasonsing and answer seems to
be related to the nature of the contract or of the breach, and to the type of violation
caused.
Cases in which there is a miscarriage or misplacement of the passengers’ luggage by a
company also have received the award of moral damages. In a case where an airline lost
the passenger’s luggage, the Supremo Tribunal Federal (the highest Brazilian court for
constitutional matters) decided that moral damages should be awarded as a form of
compensating all the discomfort, embarrassment and humiliation on these facts.117
Another situation creating and obligation to pay moral damages occurs when a bank,
because of an error in its system, sends the name of a client to a credit rating agency (i.e.
black list), and because of such conduct, the person suffers a credit grief and can no
longer obtain credit. Although in this situation it is not very clear whether the obligation
to repair the moral damages is the result of an illegal act, a contractual violation, or both,
this obligation is certain.
As analyzed and concluded below this Article notes that certain contractual cases,
because of their similarity with the tort scenario, end up deserving such special recovery
of moral damages.
IV. SUMMARY AND EVALUAITON
Based on this Article, it is possible to conclude that the reasons that authorize the
award of punitive and emotional distress damages in breach of contract situations in
American contract law are very similar to the Brazilian system. In the United States, the
award of punitive damages in breach of contract cases generally occurs in three instances:
(1) when there is a personal interest involved in the contract; (2) when the conduct that
caused the breach is such that it is almost a tort or really is an independent tort; (3) when
the activity of the company is largely related to the public, the damage may be caused in
a large degree and the company has a superior economic power.
The first category includes the following situations: breach of contract to marry and
the relationship between the parties as being one of a fiduciary character. The second,
included fraudulent conduct and when the breach is accompanied by an act that is
independent and willfully tortious. Finally, the third one includes all the public service
companies.
The rationale for the award of emotional distress damages in breach of contract
situations, may be divided in two categories: (1) when there is a personal interest
involved in the contract, making a moral injury a foreseeable consequence; (2) when the
conduct that caused the breach is such that it is almost a tort or really is an independent
tort. In the first one, the misdelivery of telegraph messages, the mishandling of corpses,
and the plastic surgery situations would be included. On the other hand, in the second
category includes the willful and wanton breach and the requirement that a bodily harm
should exist.
116
117
See STJ REO No. 201414/PA, 1999/0005328-1, Relator: Min. Waldemar Zveiter, 20.06.2000.
See STF, REO No. 172.720-9/RJ, Relator: Min. Marco Aurelio, j., 06.02.1996.
Finally, the rationale for the award of moral damages in breach of contract cases in the
Brazilian system would be summarized in two categories: (1) situations when there is a
personal interest involved in the contract; (2) when the activity of the company is largely
related to the public, the damage can be caused in a large degree and the company has a
superior economical power. Included here is the breach of a contract to marry, the plastic
surgery situation, the photographer violation, the company responsible for the
development of the film, the mishandling of corpses, and the luggage misplacement in
the first category, including only the carrier companies in the second one.
The rationales in both systems are very similar, as is the reasoning of the courts.
Because of the similarity in reasoning it is difficult to suggest what approach is the best
or which system provides the best system of compensation for breach of contract
situations. Generally, situations allowing for the recovery of these three special remedies
in breach of contract cases are based in tort law. Because courts seem to have trouble
differentiating tort and contract law, the cases are confusing. Courts award damages
because of the similarity or nexus that a contract law violation has with tort law. In
addition, some cases demonstrate that when courts award special remedies courts often
disregard contract law classifying the claim as a legal tort, thus, paving the way for
special recoveries. In this light, none of the systems seem provide consistent treatment of
breach of contract cases as cases are filled with uncertainty and confusion often
depending upon facts.
The following are several modest suggests to remedy this confounding treatment of
contract and tort law. One is to develop the contractual principles that already exist.
Because both contractual and tort law have a vast universe of well developed principles,
each field should occupy its own room, however, if there is a gap, courts should attempt
to fill that gap using the other field.
Another suggestion would be that a parties’ role in the contract should increase.
Parties would, for example, be able to include a penal clause in the contract providing for
damages in the event of a breach by either party. Thus, parties would include in contracts
such special damages, as they do with damages and losses through the penal clause
mechanism, and also through liquidated damages.
However, another suggestion for the resolution of this problemwould be the complete
abandonment of the idea of separating contract law from tort law. If it is true that both the
American and the Brazilian systems are struggling with this difficult question and that
they have not reached a satisfactory result even today, why not abandon this question?
Situations when courts awarded punitive, moral and emotional distress damages for
contract cases occur in both systems when elements of tort are confused with elements of
contract.
Moreover, the courts, when willing to award such special damages for contract
breaches, often disregard the existence of a contract and view the situation as a tort. Thus,
why not abandon definitely the delimitation of the two fields which is creating confusion
rather than helping to solve the problem of resolving disputes. What is more
important?—to provide just and fair compensation or to resolve legal questions
formality? The first option may be more appropriate because the formalities existent in
law should not be used to avoid justice. In this sense, Professor Knapp’s words may be
appropriate to consider:
The insistence on doctrinal purity by Barnett and others smacks of nothing so much as the
compulsive tidiness of a bunch of academic Felix Ungers, so intent on neat ordering that
they ignore the uses to which the lawyering Oscar Madisons of the real world may put
these doctrines. People make promises, people break promises, other people get hurt. Is
this tort? Is this contract? As Karl Llewellyn once pungently remarked, “What the
hell!”118
118
Randy E. Barnett, Foreward: Is Reliance Still Dead?, SAN DEIGO L. REV. 9, 10 (2001) quoting
Charles L. Knapp, Rescuing Reliance: The Perils of Promissory Estoppel, 49 HASTINGS L. J. 1191, 1244
(1998) [Emphasis supplied].