Punitive Damages

Definition of "Punitive damages"

Written by

Tamisha Lane

Howard Perry And Walston

First and foremost, the meaning of ‘punitive damages’ defines a financial penalty the defendant has to pay due to their negligent actions. The US legislative branch designed the concept of punitive damages to, by definition, punish and deter others from applying the same conduct.

How do punitive damages differ from compensatory damages?

Before investigating how punitive damages work, we first need to realize that they are not identical to compensatory damages. On the one hand, courts of law impose compensatory damages to cover damages, injuries, or other losses incurred. On the other hand, punitive damages go further than mere indemnity allocation for the injured plaintiff. 

Furthermore, punitive damages, often called exemplary damages, refer to such amends that a judicial award brings for a plaintiff or complainant in a lawsuit in addition to the confirmed harms. A court of justice applies punitive damages to fine and discipline the defendant, at the same time, for bad faith, malice, fraud, violence, or evil intent. Lawmakers outlined the framework of punitive damages as a form of deterring punishment designed to prevent the defendant from committing the same ills ever again. Besides, punitive damages serve as an example for others liable to be negligent or intentionally harmful for others.

How do punitive damages work?

Defendants found guilty of gross negligence or intentional harm should be discouraged from committing the crime again. They never award punitive damages alone but only on top of compensatory damages to extend the plaintiff’s punishment and financial penalties. In other words, they provide supplementary punishment for the defendant’s bad conduct. 

A legal tribune will deliver punitive damages in various instances, such as medical cases, false and misleading corporate advertising, or personal injury. We’ll explain some of these instances to draw a clearer picture of how punitive damages function.

Personal injury and punitive damages

The justice system awards compensatory damages to cover the victim’s medical bills, property or hospital expenses, and other costs in personal injury. After this, they can award punitive damages to prevent the defendant in question from future misdeeds.

Product liability negligence and punitive damages

Another example of punitive damages is the following scenario. A company produces dietary supplements, which it markets as safe and natural. However, one of their supplement consumers gets violently ill after using their new product. Let’s suppose that the specialist reveals that the item triggered a reaction with the sick client’s prescription medication or preexisting medical condition. 

Now, the customer can bring legal charges against the company and win the case. As a result, the court awards the plaintiff customary damages. In addition, the company will have to pay for punitive damages brought as a measure to deter them from similar misdeeds and negligence in the future.

Punitive damages in real estate

A court of law awards punitive damages for real estate misdemeanors to set an example and prevent the same defendants from repeating their actions. Besides, they serve to deter potential offenders from similar conduct. Unlike compensatory damages, they apply punitive damages rarely. In particular cases, compensatory damages don’t prove enough when considering the defendant’s actions. 

Premises liability and punitive damages

In real estate, they award punitive damages, for instance, in a premises liability case. Let’s take an unsafe swimming pool, for example, with a broken gate, thus granting access to children. Keeping the area protected at all times is the homeowner/landlord’s responsibility. The property owner in charge of the apartment complex is aware of the problem and its consequences. Still, they choose to ignore and never fix it even though they know children play in the neighborhood. 

The court will regularly consider the defendant’s financial status when awarding punitive damage. Wealthy individuals might receive higher retributive damage punishment to prevent them from repeating injurious acts or oversight. 

Some US states confine punitive damages to ten percent of a person’s wealth. Other states consider that punitive damages should be proportionate with compensatory damages.

Real estate disclosures and punitive damages

The law requires home sellers to disclose property issues, like lead paint, pests, property drainage problems, and neighbor disputes. Unless sellers respect these regulations, buyers can sue them once they learn about the shortcomings. Consequently, they can force the seller to pay for the damages and refurbishments. In extreme cases, they can annul the sale, returning the property to its original owner. Additionally, a home buyer can sue the seller for punitive damages.