Law Society of Ontario (LSO) Paralegal Practice Exam

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Which type of damages are meant to punish the wrongdoing of the defendant?

  1. Compensatory damages

  2. Punitive damages

  3. Nominal damages

  4. Liquidated damages

The correct answer is: Punitive damages

Punitive damages are specifically designed to punish a defendant for particularly egregious or reckless behavior and to deter similar conduct in the future. Unlike compensatory damages, which seek to make the injured party whole by covering actual losses suffered as a result of the defendant's actions, punitive damages go beyond mere compensation. They serve as a form of legal retribution against the wrongdoer, indicating that their actions were not only harmful but also deserving of additional consequences beyond compensating the victim. These damages are often awarded in cases involving torts such as fraud, malice, or gross negligence, where the defendant's conduct is found to be especially harmful or outrageous. The idea is to send a message that such behavior will not be tolerated within society and to deter others from engaging in similar actions. In contrast, compensatory damages focus solely on compensating the lost or damaged property and emotional distress caused, nominal damages acknowledge a legal wrong when no substantial harm has occurred, and liquidated damages refer to pre-determined amounts agreed upon in a contract for specific breaches. This context helps clarify why punitive damages stand out as a separate and specific remedy aimed at punishing wrongful conduct.