Law Society of Ontario (LSO) Paralegal Practice Exam

Which category of damages typically addresses tangible financial losses?

1. Aggravated damages

2. Liquidated damages

3. Compensatory/Actual damages

4. General/Non Pecuniary damages

The correct answer is: Compensatory/Actual damages

The category of damages that addresses tangible financial losses is compensatory or actual damages. These damages are designed to compensate the injured party for the actual loss suffered due to another's wrongful act. This includes quantifiable financial losses such as medical expenses, lost wages, property damage, and any other measurable economic impact resulting from the injury or harm. The goal is to restore the injured party to the position they would have been in had the incident not occurred, providing a direct link between the losses incurred and the compensation awarded. Aggravated damages, on the other hand, are intended to address intangible injuries, such as humiliation or mental anguish, arising from the defendant's conduct. Liquidated damages refer to a predetermined amount agreed upon in a contract that one party will pay to the other in case of a breach, which does not necessarily relate to tangible losses. General or non-pecuniary damages compensate for non-financial aspects, such as pain and suffering or loss of enjoyment of life, rather than for direct financial losses. Thus, compensatory or actual damages specifically focus on addressing and quantifying those tangible losses experienced by an individual.