Exemplary Damages Definition and Legal Meaning

On this page, you'll find the legal definition and meaning of Exemplary Damages, written in plain English, along with examples of how it is used.

What is Exemplary Damages?

n. Referred to as punitive damages, these damages are requested and/or awarded in a lawsuit when the defendant’s actions were malicious, violent, oppressive, fraudulent, wanton or grossly reckless. For example: publishing that someone had committed murder when the publisher knew that the facts were not accurate; an ex-husband destroys his former wife’s automobile and threatens further property damage; a stockbroker buys and sells a widow’s stocks to generate commissions that results with the widow losing her capital money. Exemplary damages are awarded as punishment and to set an example for the public, rewarding the plaintiff for the horrible nature of what he/she endured. Exemplary damages are seldom awarded, but often requested. There have been major awards in remarkable (egregious or outstanding) cases, such as fraud schemes, sexual harassment, or other intentional vicious actions, even if the actual damages that could be proven were not that extensive.

History and Meaning of Exemplary Damages

Exemplary damages, also known as punitive damages, are awarded in a lawsuit to punish the defendant and set an example for the public to discourage similar behavior in the future. These damages are usually awarded in cases where the defendant’s actions were malicious, violent, oppressive, fraudulent, wanton or grossly reckless. The purpose of exemplary damages is to deter future misconduct by holding those responsible accountable for their actions.

Examples of Exemplary Damages

Here are a few examples of when exemplary damages could be awarded in a lawsuit:

  • A company that knowingly sells a defective product that puts consumers at risk could be ordered to pay exemplary damages.
  • An employer who repeatedly refuses to pay wages owed to employees could be ordered to pay exemplary damages as a way to deter future behavior.
  • A landlord who knowingly rents out an unsafe living space could be ordered to pay exemplary damages as a warning to others who may consider doing the same.

Legal Terms Similar to Exemplary Damages

Here are a few legal terms that are similar to exemplary damages:

  • Compensatory damages: These are damages awarded to compensate the plaintiff for their actual losses, such as medical bills or lost wages.
  • Nominal damages: These are damages awarded to the plaintiff as a symbolic victory, usually in cases where there was no actual harm done.
  • Liquidated damages: These are damages that are agreed upon in advance by the parties in a contract, to help settle disputes that may arise in the future.