Instructing Juries on Noneconomic Contract Damages

Abstract

Gathering pattern contract jury instructions from every State, we examine jurisdictions' treatment of noneconomic damages. While the conventional account holds that there is a uniform preference against awards of noneconomic damages, we find four different approaches in pattern instructions, with only one state explicitly prohibiting juries from considering noneconomic losses. Lay juries have considerably more freedom to award the promisee's noneconomic damages than the hornbooks would have us believe.

We substantiate this claim with an online survey experiment asking respondents about a common contract case, and instructing them using the differing pattern forms. We found that subjects routinely awarded more than the promisee's baseline economic losses. In one of the categories of instruction — in which contract juries are instructed to award a tort-like form of remedy — subjects returned almost two times more in damages than the promisee's mere expectation. The resulting picture of contract remedies is considerably more complex than the conventional wisdom portrays, but significantly more realistic.

Keywords: jury instructions, contract damages, noneconomic losses, law and psychology, expectation, contracts

JEL Classification: K12