Civil Damages

Posted in Finance, Accounting and Economics Terms, Total Reads: 252
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Definition: Civil Damages

Civil damages refer to compensation which is usually monetary compensation that a losing defendant has to pay to a winning claimant in a civil law suit in a court of law. Civil damages can be classified into three types namely - general, punitive or special.


General damages: Include payment for mental suffering such as pain and emotional distress. Also called hedonic damages, these damages purpose is to compensate the claimant for the emotional damage suffered. Examples of this type of damages include emotional pain, suffering, defamation, loss of companionship, loss of consortium, disfigurement, loss or impairment of mental or physical capacity, loss of reputation etc. As this is not easily verified, it depends on the individual circumstances of the claimant and the judgement is based on previous similar cases.


On the other hand, Punitive damages or exemplary damages refer to payment for damages caused by gross negligence of the defendant. The main purpose of imposing these damages is to reform and deter the defendant and others from doing a similar activity that which has been the reason for the lawsuit. Though the purpose of these damages is not to compensate the claimant, the claimant will receive some portion of the punitive damage award.


Special damages: These compensate the claimant for the quantifiable and verifiable financial loss suffered by the claimant. These include compensation to be paid for expenses such as medical bills, legal costs, loss due to damaged goods or property etc.


For example, let us say Mr. A agrees to sell Mr. B an antique painting for Rs. 50,000. But the painting is fake and its real worth is only Rs. 500. Is A sues B in court, he will be entitled to get his Rs. 50,000 back.

 

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