Punitive Damages
What does "Punitive Damages" mean in law?
Punitive damages (also called exemplary damages) are awarded not to compensate the plaintiff but to punish the defendant for particularly egregious, malicious, or willful conduct and to deter similar future behavior. In contract law, punitive damages are generally unavailable because contract remedies aim to compensate rather than punish; however, they may be awarded when the breach also constitutes an independent tort accompanied by fraud, malice, or oppression. The Supreme Court in BMW of North America v. Gore established constitutional guideposts limiting punitive damages, including the degree of reprehensibility, the ratio between punitive and compensatory damages, and comparable civil penalties. Most jurisdictions require clear and convincing evidence to support a punitive damages award.
Definition
Punitive damages (also called exemplary damages) are awarded not to compensate the plaintiff but to punish the defendant for particularly egregious, malicious, or willful conduct and to deter similar future behavior. In contract law, punitive damages are generally unavailable because contract remedies aim to compensate rather than punish; however, they may be awarded when the breach also constitutes an independent tort accompanied by fraud, malice, or oppression. The Supreme Court in BMW of North America v. Gore established constitutional guideposts limiting punitive damages, including the degree of reprehensibility, the ratio between punitive and compensatory damages, and comparable civil penalties. Most jurisdictions require clear and convincing evidence to support a punitive damages award.
Example
When an insurance company deliberately destroyed evidence and repeatedly denied a valid claim in bad faith, the jury awarded $50,000 in compensatory damages and $500,000 in punitive damages to deter such conduct.