Compensatory vs Punitive Damages
The objective of each is that creates the difference between compensatory and punitive damages. We have all heard of the term Damages. It represents a remedy or award granted in civil law cases that are typically a monetary payment paid to a person who has suffered a loss or injury. Damages is the general term and it can be sub-divided into different categories depending on the nature of the case and the extent of the loss or injury. Compensatory and Punitive Damages represent two subcategories within the remedy of Damages. Indeed, Compensatory Damages is further divided into several other types of Damages including special damages, non-economic damages and nominal damages. Damages is based on the principle of making good a loss or injury suffered by an aggrieved party as opposed to punishing the wrongdoer or person who caused the loss or injury. However, an exception to this principle is Punitive Damages. In short, Punitive Damages focuses on punishing the wrongdoer rather than compensating the victim.
What is Compensatory Damages?
In law, Compensatory Damages is defined as a sum of money awarded by a court, in a civil case, to make good a particular loss, detriment or harm suffered as a result of the wrongful actions of another. This wrongful act could be a breach of duty or breach of contract. A famous example of a breach of duty is the tortious claim of negligence. Thus, where the loss or injury suffered by a person has affected his/her personal and/or property rights, then that person can claim Compensatory Damages. The purpose of Compensatory Damages is to replace what was lost or compensate the injury that was suffered by the aggrieved party or plaintiff as a result of the defendant’s actions.
Compensatory Damages will be awarded for instances such as loss of earnings and/or profits, medical expenses, property damage, mental and emotional suffering, and pain. The plaintiff must sufficiently prove that he/she suffered a loss or injury and that such a loss or injury was as a result of the defendant’s actions in order to claim Compensatory Damages.
What is Punitive Damages?
Punitive Damages is defined as a monetary payment awarded to an aggrieved party in circumstances where the wrongdoer’s actions or inaction was of a malicious, evil, or reckless nature. Such Damages are awarded based on the court’s discretion. Thus, if the judge and/or jury determine that the defendant’s conduct or actions have been outrageous or malicious, the court will impose a punishment by way of Punitive Damages. The purpose of awarding such Damages is to punish the defendant, deter him/her from committing the same act in the future and deterring others from committing similar acts. The extent and nature of Punitive Damages differ from jurisdiction to jurisdiction. In the United Kingdom, Punitive Damages is referred to as exemplary damages.
Punitive Damages is awarded with the aim of reforming the wrongdoer and preventing the repetition of such conduct or acts. When awarding Punitive Damages, the court will look at the nature of the defendant’s actions, his/her state of mind and the extent of the plaintiff’s loss or injury. In certain instances, Punitive Damages will be awarded in addition to Compensatory Damages. Punitive Damages are most often awarded in cases involving wrongful deaths. Examples of this include death as a result of another’s gross negligence or recklessness (driving under the influence of alcohol and killing a pedestrian or motorist) or even death as a result of medical malpractice or corporate negligence. Further, if the defendant’s actions or conduct amount to bad faith, fraud, malice, oppression, gross negligence, recklessness, outrageous violence, and other such similar aggravating circumstances or acts, then Punitive Damages may be awarded. In short, if the defendant’s behaviour displays a blatant disregard for the aggrieved party’s rights, then Punitive Damages will be ordered.
What is the difference between Compensatory and Punitive Damages?
It is evident then that Compensatory and Punitive Damages represent two entirely different types of civil law remedies. Although they derive from the general remedy of Damages, they differ in their nature and purpose.
• Compensatory Damages represents the more popular and standard type of Damages awarded to an aggrieved party. It is a monetary payment awarded by the court to the plaintiff in a civil action. This monetary payment is awarded to compensate the plaintiff for a particular loss or injury suffered as a result of the defendant’s actions.
• Compensatory Damages is further divided into subcategories such as special damages and general damages.
• Generally, however, Compensatory Damages is awarded for loss of earnings, profit, employment, property damage, medical expenses, mental and emotional suffering, and pain.
• Punitive Damages is a monetary payment awarded to a plaintiff in certain circumstances. Thus, this type of Damages may be awarded in addition to Compensatory Damages.
• The purpose of awarding Punitive Damages is to punish the defendant and teach him/her a lesson thereby deterring him/her from repeating the same actions and deterring others from committing similar acts.
• Typically, the discretion of awarding Punitive Damages lies with the court. Thus, the court will award such Damages based on the extent of the loss or injury suffered by the plaintiff as well as the nature of the defendant’s actions.