What is "punitive damages"

Damage \Dam"age\ (d[a^]m"[asl]j; 48), n. [OF. damage, domage, F. dommage, fr. assumed LL. damnaticum, from L. damnum damage. See Damn.]

1. Injury or harm to person, property, or reputation; an inflicted loss of value; detriment; hurt; mischief.

   He that sendeth a message by the hand of a fool cutteth off the feet and drinketh damage.
   --Prov. xxvi. 6.

   Great errors and absurdities many commit for want of a friend to tell them of them, to the great damage both of their fame and fortune.
   --Bacon.

2. pl. (Law) The estimated reparation in money for detriment or injury sustained; a compensation, recompense, or satisfaction to one party, for a wrong or injury actually done to him by another.

   Note: In common-law actions, the jury are the proper judges of damages.

   Consequential damage. See under Consequential.

   Exemplary damages (Law), damages imposed by way of example to others. Similar in purpose to vindictive damages, below.

   Nominal damages (Law), those given for a violation of a right where no actual loss has accrued.

   vindictive damages or punitive damages, those given specially for the punishment of the wrongdoer.

   Syn: Mischief; injury; harm; hurt; detriment; evil; ill. See Mischief.

n. (law) compensation in excess of actual damages (a form of punishment awarded in cases of malicious or willful misconduct) [syn: exemplary damages, smart money]

Punitive damages, or exemplary damages, are damages intended to reform or deter the defendant and others from engaging in conduct similar to that which formed the basis of the lawsuit. Although the purpose of punitive damages is not to compensate the plaintiff, the plaintiff will receive all or some of the punitive damages award.

Punitive damages are often awarded if compensatory damages are deemed an inadequate remedy. The court may impose them to prevent undercompensation of plaintiffs and to allow redress for undetectable torts and taking some strain away from the criminal justice system. Punitive damages are most important for violations of the law that are hard to detect.

However, punitive damages awarded under court systems that recognize them may be difficult to enforce in jurisdictions that do not recognize them. For example, punitive damages awarded to one party in a US case would be difficult to get recognition for in a European court in which punitive damages are most likely to be considered to violate ordre public.

Because they are usually paid in excess of the plaintiff's provable injuries, punitive damages are awarded only in special cases, usually under tort law, if the defendant's conduct was egregiously insidious. Punitive damages cannot generally be awarded in contract disputes. The main exception is in insurance bad faith cases in the US if the insurer's breach of contract is alleged to be so egregious as to amount to a breach of the "implied covenant of good faith and fair dealing," and is therefore considered to be a tort cause of action eligible for punitive damages (in excess of the value of the insurance policy).