Answer:
Punitive damages are awarded in lawsuits as a punishment to deter others from engaging in malicious or fraudulent behavior. The plaintiff must prove, by a preponderance of the evidence, that punitive damages are warranted and the amount to be awarded. To succeed, the plaintiff must show that the defendant acted with malice or recklessly disregarded the plaintiff's rights.
Compensatory damages, which include direct and consequential damages, differ from punitive damages. For example, if a plaintiff pays $10,000 for a truck that the defendant refuses to deliver, the direct damages would be $10,000. Consequential damages could arise if the failure to deliver the truck caused the plaintiff to lose a delivery contract, potentially leading to additional damages for that loss.
The relationship between punitive and compensatory damages is often discussed in policy debates. Courts and legislatures may consider the amount of compensatory damages when evaluating the reasonableness of punitive awards. Since punitive damages are awarded less frequently than compensatory damages, they are often less predictable.
This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.