punitive damages
Definition
Punitive damages are extra money a court orders someone to pay on top of the actual losses they caused, specifically to punish them for behaving in a particularly reckless or malicious way. Think of it as a financial penalty designed to make an example of the wrongdoer and discourage others from doing the same thing. Regular damages cover your losses, but punitive damages are the court saying the behavior was so bad that a bigger consequence is needed.
Example
If a company knowingly sold you a dangerous product and you sued them, the court might award you $50,000 to cover your medical bills and then tack on an additional $500,000 in punitive damages because the company's conduct was so outrageous.
Watch Out
Punitive damages are rare and courts only award them when someone acted with extreme negligence or intentional wrongdoing, so you cannot count on them as a likely outcome in a typical business dispute.
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This definition is for informational purposes only and does not constitute legal advice. Please consult with a licensed attorney for legal guidance.