Business, Legal & Accounting Glossary

Definition: Damages


Quick Summary of Damages

The remedy available at Common law for a breach of contract. In general, damages are a financial award, make against the person in breach, and intended to make good his failure to fulfil his obligations (see: Remedies for breach of contract). A sum of money paid in compensation for loss or injury.

Video Guide For Damages

What is the dictionary definition of Damages?

Dictionary Definition

n. the amount of money which a plaintiff (the person suing) may be awarded in a lawsuit. There are many types of damages. Special damages are those which actually were caused by the injury and include medical and hospital bills, ambulance charges, loss of wages, property repair or replacement costs or loss of money due on a contract. The second basic area of damages are general damages, which are presumed to be a result of the other party’s actions, but are subjective both in nature and determination of the value of damages. These include pain and suffering, future problems and crippling effect of an injury, loss of ability to perform various acts, shortening of life span, mental anguish, loss of companionship, loss of reputation (in a libel suit, for example), humiliation from scars, loss of anticipated business and other harm. The third major form of damage is exemplary (or punitive) damages, which combines punishment and the setting of public example. Exemplary damages may be awarded when the defendant acted in a malicious, violent, oppressive, fraudulent, wanton or grossly reckless way in causing the special and general damages to the plaintiff. On occasion, punitive damages can be greater than the actual damages, as, for example, in a sexual harassment case or fraudulent schemes. Although often asked for, they are seldom awarded. Nominal damages are those given when the actual harm is minor and an award is warranted under the circumstances. The most famous case was when Winston Churchill was awarded a shilling (about 25 cents) against author Louis Adamic, who had written that the British Prime Minister had been drunk at a dinner at the White House. Liquidated damages are those pre-set by the parties in a contract to be awarded in case one party defaults as in breach of contract.

Full Definition of Damages

In a lawsuit, money awarded to one party based on injury or loss caused by the other.

Damages are compensation awarded to the plaintiff in a personal injury lawsuit if the courts or jury decide the defendant’s negligence caused the plaintiff’s injury or loss. Compensation or reparation payments can include compensatory damages which include replacement costs and medical costs, punitive damages which are used to punish the defendant, special damages which include wage loss, statutory damages which are required by law and exemplary damages.

To receive damages in a personal injury case the plaintiff must prove the defendant’s behaviour was negligent and their negligence was the proximate cause of the plaintiff’s injuries. For a defendant to avoid paying damages to the plaintiff they have to prove they were not at fault, the plaintiff did not suffer loss, the amount of recovery is incorrect or unfair or the plaintiff’s injuries were caused by their own failure.

Consider, some states have different laws to determine how compensation is awarded in a personal injury case. For instance, some states use a pure contributory system and the plaintiff may not be entitled to any damages if the defence proves they were partially responsible for their own injuries.

There are many different types or categories of damages that occasionally overlap, including:

Compensatory Damages

Damages that cover actual injury or economic loss. Compensatory damages are intended to put the injured party in the position he was in prior to the injury. Compensatory damages typically include medical expenses, lost wages and the repair or replacement of property. Also called “actual damages.”

General Damages

Damages intended to cover injuries for which an exact dollar amount cannot be calculated. General damages are usually composed of pain and suffering, but can also include compensation for a shortened life expectancy, loss of the companionship of a loved one and, in defamation cases (libel and slander), loss of reputation.

Nominal Damages

A term used when a judge or jury finds in favour of one party to a lawsuit–often because a law requires them to do so–but concludes that no real harm was done and therefore awards a very small amount of money. For example, if one neighbour sues another for libel based on untrue things the second neighbour said about the first, a jury might conclude that although libel technically occurred, no serious damage was done to the first neighbour’s reputation and consequentially award nominal damages of $1.00.

Punitive Damages

Sometimes called exemplary damages, awarded over and above special and general damages to punish a losing party’s willful or malicious misconduct.

Special Damages

Damages that cover the winning party’s out-of-pocket costs. For example, in a vehicle accident, special damages typically include medical expenses, car repair costs, rental car fees and lost wages. Often called “specials.”

Statutory Damages

Damages required by statutory law. For example, in many states, if a landlord doesn’t return a tenant’s security deposit in a timely fashion or give a reason why it is being withheld, the state statutes give the judge authority to order the landlord to pay damages of double or triple the amount of the deposit.

Treble Damages

Lawyerspeak for triple damages. To penalize lawbreakers, statutes occasionally give judges the power to award the winning party in a civil lawsuit the amount it lost as a result of the other party’s illegal conduct, plus damages of three times that amount.

Cite Term

To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.

Page URL
Modern Language Association (MLA):
Damages. PayrollHeaven.com. Payroll & Accounting Heaven Ltd.
December 08, 2022 https://payrollheaven.com/define/damages/.
Chicago Manual of Style (CMS):
Damages. PayrollHeaven.com. Payroll & Accounting Heaven Ltd.
https://payrollheaven.com/define/damages/ (accessed: December 08, 2022).
American Psychological Association (APA):
Damages. PayrollHeaven.com. Retrieved December 08, 2022
, from PayrollHeaven.com website: https://payrollheaven.com/define/damages/

Definition Sources

Definitions for Damages are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 26th November, 2021 | 0 Views.