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Punitive Damages: Definition + Examples

Rob Browne
Rob Browne  |  November 8, 2019


Companies make many claims when advertising their products.

Just think of all of the weight that these claims hold in the public consciousness. Brands are built on them through brand storytelling, and the decisions of consumers are sometimes influenced more by what a product says it does than the actual value it can provide.

With all of the power in the hands of the corporations that make these claims, there should be a system in place for holding them accountable for any wrongdoing or falsities.

Punitive damages: definition, significance, and examples

Let’s take a deeper dive into punitive damages to see just how they are instituted and why they matter.

Background

The purpose of litigation is to restore the plaintiff to the way they were before an accident or event occurred. If you became ill from a product not correctly warning you of the effects it can have on health, your medical care should be taken care of. If you are in a car crash at no fault of your own, your car should be repaired.

The underlying intent of punitive damages are not to give the plaintiff something that they lost. They are to punish the defendant for particularly outrageous conduct. Punitive damages go above and beyond compensatory damages by punishing the defendant on top of the compensatory charges to send a message that this type of conduct is not acceptable in society.

Additionally, punitive damages are paid to the plaintiff, even if the primary purpose of imposing them is to punish the defendant. Essentially, they will put the plaintiff in a much better financial position than they were before the accident or event occurred.

In the United States, punitive damages are typically matters of state law. They are also most likely decided based on statute. Punitive damages are unavailable regardless of case or circumstance in a few states, including Louisiana, Nebraska, and Washington.

Why are punitive damages important?

Why are punitive damages important? The intent of assigning them is to set a standard for future rules and regulations in society. Being charged with having to pay punitive damages instills in the defendant that their actions were not only illegal, but they were directly detrimental to the well-being of society. They set an example to the defendant not to engage in this type of behavior again, and set an example for all who see the case that there is large punishment coming for anyone that does.

Examples of punitive damages

One example of punitive damages would be a company that sells a specific type of supplement that promises muscle gain and leaner physique. If a customer were to take this supplement, believing the company’s claim that it is completely safe, and become ill, the company would potentially be liable to pay for the cost of the medical bills, but also pay for punitive damages. The company would be liable for not being completely truthful about their product and punished with payments for punitive damages as a result.

Another example could be between two corporations that directly compete with each other, selling similar products to the same consumer base. If one company is found guilty of inappropriately utilizing trade secrets that boosted their sales and directly harmed the other brand, they could be penalized and forced to pay punitive damages to the competing brand.

Punitive for good

All in all, punitive damages exist to help society function better as a whole. By penalizing defendants that cause excessive damage or harm, we can set a standard for how to best treat each other. Going over cases with punitive damages can also be made easy with legal software, as you’re able to dive into a number of data points and determine applicable precedents when working with a case.

Read reviews of best Legal software, FREE. Learn more →

Rob Browne
Author

Rob Browne

Rob is a Content Marketing Specialist at G2 Crowd writing about all things marketing. Originally from New Jersey, he previously worked at an NYC-based business travel startup. (he/him/his)