Contract Glossary
Punitive Damages
Definition
Money awarded to the plaintiff beyond their actual losses, designed to punish the defendant for especially egregious, malicious, or reckless conduct and to deter others from similar behavior. Unlike compensatory damages (which make the victim whole), punitive damages are meant to sting, they're the legal system's way of saying 'that was so bad, you need to pay extra.'
In Practice
A franchisor knowingly sells franchise rights in a territory it has already promised exclusively to another franchisee. The first franchisee discovers the overlap and sues. A court awards compensatory damages for lost revenue ($200,000) plus punitive damages ($600,000) because the franchisor acted intentionally and in bad faith, they knew exactly what they were doing and did it anyway. The punitive award sends a message to all franchisors: don't double-sell territories.
Common in these contract types
Related contract clauses
Frequently asked questions
Create a contract with proper punitive damages clauses
Generate a professional contract in minutes with all the essential clauses -- no legal expertise needed.
Create your contractThis content is for informational purposes only and does not constitute legal advice.