From a moral perspective, it is very easy to understand the difference between intending to keep a promise but failing to keep the promise, and blatantly lying when making a promise with the secret intention to never fulfill the promise. People are naturally much more offended and shocked by the latter scenario, so it is not surprising that many jurisdictions treat breach of contract differently when a promisee can prove that a promisor intended to breach the contract at the time of making the promise, something known as promissory fraud according to our friends at Mughal Law Firm.
Some jurisdictions apply punitive damages for promissory fraud. If a promisee can prove the fraudulent intent of the promisor never intending to perform the contract at the time of the contract, then in a addition to the court awarding monetary compensation for the value of the breach, the court may also award additional money as a means of punishing the promisor, not just for the compensation of the promisee.
Proving intent for promissory fraud might sometimes require showing that many usual excuses of non-performance of a contract do not exist in a particular situation. Other requirements that jurisdiction might have for proving intent in promissory fraud is consistent behavior on non-performance, such as a warehouse promising to deliver inventory to retail stores for money up front, but never delivering inventory for to any retailer and serially moving from retailer to retailer offering inventory while never having delivered to any retailer. Another method of proving intent for promissory fraud might be showing that there has not been any change in circumstance that would result in additional difficulty upon the promisor in fulfilling their promise. Usually when a promisor intends to execute a promise in good faith initially but then later eventually breaches the contract, there is some change in circumstance that makes fulfilling the promise more difficult than the original circumstances in which the promise was made.
A 1928 case before the Supreme Court of Virginia known as “Lloyd v. Smith” examined the issue of when breach of contract cases can discuss the issue of fraud. The case famously sets a high bar for claims of fraud because the court felt that the alternative would turn every breach of contract case into a fraud case.
If you believe that you may be a victim of promissory fraud in addition to breach of contract, you may want to consult with an experienced contract lawyer in your area.