Pure Oil Company enters into a contract with QuikBilt, Inc., to construct an oil pipeline to withstand specific conditions. If QuikBilt fails to meet this standard, which is construed as a breach of contract and a breach of a duty of care, Pure might be awarded punitive damages to
A) establish, as a matter of principle, that QuikBilt acted wrongfully.
B) provide Pure with funds for a foreseeable loss beyond the contract.
C) provide Pure with funds for its loss of the bargain.
D) punish QuikBilt and deter others from similar acts.

Question

Quizplus · Accepted Answer

Punitive damages are awarded to punish the wrongdoer and deter others from similar acts. They go beyond compensating for the actual loss and are meant to serve as a deterrent. In this case, if QuikBilt failed to meet the agreed standard, it would be considered a breach of contract and a breach of a duty of care. As a result, punitive damages may be awarded to Pure to punish QuikBilt and deter others from similar behavior.

Pure Oil Company Enters into a Contract with QuikBilt, Inc