Discussion Question 2

Discuss the differences between compensatory, punitive, and nominal damages. Provide an example of punitive damages, including a citation for the case.

Compensatory, Punitive, and Nominal Damage

Name of the student

ANSWER

Compensatory, Punitive, and Nominal Damage

Damages are examples of legal remedies whereby money is paid by one side to another in an attempt to measure the extent of harm caused. Compensatory damages are paid to claimants or non-breaching party as a form of compensation for any injury, loss, or harm resulting from the breach of duty or negligence (Schultz, 2014). Compensatory damages are meant to grant justice to these claimants for being wronged. For instance, if person A made stew cans and sold in a supermarket that Person B buys from and finds severed fingers in the stew can, B can sue A for emotional distress. When B proves that he suffered from PSTD, could not work effectively, and had to undergo therapy, the court can be awarded compensatory damages for losses, therapy expenses, and injuries caused.

On the other hand, punitive damages are paid to plaintiffs for deterrence and reformation of defendants’ actions. Using the previous example of person A and B, B can be awarded punitive damages against A to prevent the possible presence of severed finger in stew cans. In another example, Company A manufactures supplements for weight loss, where they assure clients that the supplements are safe for use and effective in achieving weight loss in their advertisement. When Meryl buys and consumes the supplements for a fortnight, she becomes violently sick due to drug-drug reactions, and her medical bill amounts to over $6,000. In the hospital, it is confirmed that the supplements caused severe reaction and illness. When Meryl files a lawsuit against Company A for misinformation and lack of warning for customers, a judge can decide to rule in favor of Meryl awarding her punitive damages to punish Company A for negligence and recklessness. Person A and Company A are penalized for misconduct, and the judge aims at deterring the behavior and misconduct seen in the case re-occurring in the future (Schultz, 2014).

Nominal damages are paid in situations where a breach of contract is experienced, the non-breaching party suffers no actual loss or cannot prove it, and financial harm is not incurred (Schultz, 2014). Mostly nominal damages are $1 or $2. For instance, Company X enters into a contract with Company Z for producing 5000 pens. Z cannot produce the pens but gets into the agreement based on deception and fraud. Over time, X realizes they did not require the 5000 pens as they had stored. After contacting Z, they find out they were not going to make the pens. Company X can be awarded nominal damages for deception and fraud perpetrated by company Z.

Reference

Schultz, D. A. (2014). The Encyclopedia of American Law. New York: Facts on File, Inc.