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CHANAKYA NATIONAL LAW UNIVERSITY


NYAYA NAGAR, MITHAPUR, PATNA - 800001

FINAL DRAFT

Law of Torts
Compensation – compensatory, aggravated
and exemplary damages: nature, meaning
and differences
SUBMITTED TO: -
Mrs. SUSHMITA SINGH
FACULTY OF LAW
SUBMITTED BY: -
VENKAT NILAY
1st SEMESTER
ROLL NO.: 1863
B.B.A., L.L.B(HONS)
(2017-2022)
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DECLARATION BY THE CANDIDATE

I, VENKAT NILAY, student of Chanakya National Law University hereby


declare that the work reported in the B.B.A.LL.B.(HONS.) project report entitled:
Compensation – compensatory, aggravated and exemplary damages:
nature, meaning and differences submitted at Chanakya National Law
University, Patna is an authentic record of my work carried out under the
supervision of Mrs. Sushmita Singh. I have not submitted this work elsewhere for
any other degree or diploma. I am responsible for the contents of my Project
Report.

(Signature of the Candidate)


NAME: VENKAT NILAY

ROLL NO: 1863

COURSE: B.B.A., LL.B. (Hons.)

SEMESTER: 2017-2018 (1ST)

SESSION: 2017-2022
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ACKNOWLEDGEMENT

I would like to thank my faculty Mrs. Sushmita Singh whose guidance helped
me a lot with structuring of my project. I take this opportunity to express
my deep sense of gratitude for her guidance and encouragement which
sustained my efforts on all stages of this project.

I owe the present accomplishment of my project to my friends, who helped


me immensely with materials throughout the project and without whom I
couldn’t have completed it in the present way.

I would also like to extend my gratitude to my parents and all those unseen
hands that helped me out at every stage of my project.

THANK YOU

NAME: VENKAT NILAY

ROLL NO: 1863

COURSE: B.B.A., LL.B. (Hons.)

SEMESTER: 2017-2018 (1ST)

SESSION: 2017-2022
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CHAPTERIZATION:

1. Introduction…………………………………………………………………………05

a. Review of Literature………………………………………………………...05

b. Aims and Objectives………………………………………………………...07

c. Hypothesis…………………………………………………………………...07

d. Research Questions…………………………………………………………..07

2. Research Methodology………………………………………………………………08

a. Mode of Citation……………………………………………………………..08

b. Sources of Data………………………………………………………………08

c. Limitation…………………………………………………………………….08

3. Compensation or Damages in The Law of Tort……………………………………...09

4. Types of Compensation: Compensatory, Aggravated and Exemplary Damages…….17

5. Similarities and Differences Among the Different Types of Damages………………21

6. Conclusion and Suggestion…………………………………………………………...25

7. Bibliography………………………………………………………………………….26
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CHAPTER 1:

INTRODUCTION

In law, damages are an award, typically of money, to be paid to a person as compensation for
loss or injury. The rules for damages can and frequently do vary based on the type of claim
which is presented (e.g., breach of contract versus a tort claim) and the jurisdiction.

At common law, damages are categorized into compensatory (or actual) damages,
aggravated and exemplary(or punitive) damages.

Compensatory damages are further categorized into special damages, which are economic
losses such as loss of earnings, property damage and medical expenses, and general damages,
which are noneconomic damages such as pain and suffering and emotional distress. Punitive
damages, as the name would indicate, are designed to punish. In this, they constitute an
exception to the general common law rule that damages are designed to compensate the injured,
not to punish the wrongdoer.
Aggravated damages are awarded to compensate for aggravated damage. They take account
of intangible injuries and by definition will generally augment damages assessed under the
general rules relating to the assessment of damages. Aggravated damages are compensatory in
nature and may only be awarded for that purpose. Punitive damages, on the other hand, are
punitive in nature and may only be employed in circumstances where the conduct giving the
cause for complaint is of such nature that it merits punishment

REVIEW OF LITERATURE
1. Bangia R.K., Law of Torts

This book deals with the general concepts defining the ambits and limitations of the
project. It further gives a proper insight to the various case laws. It discusses the nature
and scope of basic concepts to tort. It distinguishes between tort and crime, and tort and
other civil wrongs. The essentials of law of torts can be easily understood by studying
this book.
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2. W. M. Landes and R. Posner, The Economic Structure of Tort Law

This book provides great insight on the difference and co-relations between various
damages or compensations thus making the concept and their proper use transparent
and clear.
It also discusses the concept and scope of quantum of damages, its types and methods
to fix the quantum. Written by a lawyer and an economist, this is the first full-length
economic study of tort law--the body of law that governs liability for accidents and for
intentional wrongs such as battery and defamation. Landes and Posner propose that tort
law is best understood as a system for achieving an efficient allocation of resources to
safety--that, on the whole, rules and doctrines of tort law encourage the optimal
investment in safety by potential injurers and potential victims.

The book contains both a comprehensive description of the major doctrines of tort law
and a series of formal economic models used to explore the economic properties of
these doctrines. All the formal models are translated into simple common sense terms
so that the "math less" reader can follow the text without difficulty; legal jargon is also
avoided, for the sake of economists and other readers not trained in the law.

Although the primary focus is on explaining existing doctrines rather than on exploring
their implementation by juries, insurance adjusters, and other "real world" actors, the
book has obvious pertinence to the ongoing controversies over damage awards,
insurance rates and availability, and reform of tort law-in fact it is an essential
prerequisite to sound reform. Among other timely topics, the authors discuss punitive
damage awards in products liability cases, the evolution of products liability law, and
the problem of liability for "mass disaster" torts, such as might be produced by a nuclear
accident. More generally, this book is an important contribution to the "law and
economics" movement, the most exciting and controversial development in modern
legal education and scholarship, and will become an obligatory reference for all who
are concerned with the study of tort law.
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AIMS AND OBJECTIVES

 The researcher’s prime aim is to present a detailed study of "COMPENSATION:


COMPENSATORY, AGGRAVATED AND EXEMPLARY DAMAGES – NATURE,
MEANING AND DIFFERENCES", through articles, affirmations, decisions and
suggestions.
 The researcher aims to descriptively provide a critical overview of the topics arising.
 The main goal of this research is to understand the legal position in English and Indian
context
 And also to know about evolution of related case law(s) with changing spectra of
society.

HYPOTHESIS

 The researcher presumes that there isn’t clear guideline based on which one of the
different types of damages may be awarded by the Court,
 The researcher also presumes that in many cases quantum and type of damages are
influenced by external factors of precedent, insolvency and compromise.

RESEARCH QUESTONS

1. What are damages in the law of torts?


2. What are the different types of damages? What is the mechanism of determining the
type and quantum of compensation?
3. What is actual or compensatory damages? How do you determine compensatory
damages?
4. What is the meaning of aggravated damages? How are exceptional cases determined?
5. What are punitive or exemplary damages? What is its intent? When can exemplary
damages be awarded?
6. What are the differences between compensatory, aggravated and exemplary damages?
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Chapter 2:

RESEARCH METHODOLOGY

The researcher will be relying on Doctrinal method of research to complete the project. These
involve various primary and secondary sources of literature and insights.

MODE OF CITATION

The researcher has followed Bluebook Citation [19th edition].

SOURCES OF DATA

PRIMARY SOURCES:

1. Jurisprudence on the Law of Torts


2. Case laws related to the subject at hand.

SECONDARY SOURCES:

1. Websites and Blogs.


2. Published Papers and Op-ed.
3. Law Books.
4. Encyclopedia

LIMITATIONS OF THE STUDY

The researcher has territorial, monetary and time limitations in completing the project.
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Chapter 3:
Compensation or Damages in The Law of Tort

In law, damages are an award, typically of money, to be paid to a person as compensation for
loss or injury.[ 1] The rules for damages can and frequently do vary based on the type of claim
which is presented (e.g., breach of contract versus a tort claim) and the jurisdiction.

At common law, damages are categorized into compensatory (or actual) damages, and
punitive damages. Compensatory damages are further categorized into special damages, which
are economic losses such as loss of earnings, property damage and medical expenses, and
general damages, which are noneconomic damages such as pain and suffering and emotional
distress.

The word “tort” in law means a wrong or injury, which has certain characters, the most
important of which is that is it redressable in an action for damages at the instance of the person
wronged or injured. We can consider assault, libel, trespass and nuisance as few examples. A
tort, precisely, is the violation of a right of a person or a breach of duty of another towards
him/her.

In tort law, a remedy in the form of monetary compensation is given to the aggrieved party.
Damages, in a legal sense, is the sum of money, the law impose for a breach of duty or violation
of some right. More appropriately, damages are money claimed by, or ordered to be paid to, a
person as compensation for loss or injury[2]. Generally there are three categories of damages:
1. Compensatory
2. Aggravated
3. Exemplary

The term “damages” typically includes both categories, but the term “actual damages” is
synonymous with compensatory damages and excludes punitive damages. Compensatory
damages are intended to relieve the injured party for his loss or injury.

There are other modifying terms placed in front of the word damages like “liquidated damages”

1
International principle: Trans-Lex.org, Garner, p.416
2
Black’s Law Dictionary
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(contractually established damages) and “nominal damages” (where the court awards a nominal
amount).

The aim of tortious damages is to put the claimant back into the position he/she was in, pre-
tort. The claimant will, therefore, be able to recover reliance loss. Damages in tort are subjected
to the principles of remoteness, causation ad mitigation. The basic principle is that it should be
tried that the claimant be fully compensated for loss as far as this can be done by an award of
money.

Efficient damages awards are critical to the optimal functioning of the tort system. Though a
number of rules exist for damage calculation, none are “the” rule in every situation. Optimal
damage award depends on:

a) The nature of the injury

b) The relationship of the parties and the type of risk

c) The liability rule

d) Whether liability is individual or vicarious

e) Any existing imperfections

DAMAGES IN TORT

Damages are the most important remedy which the plaintiff can avail of after the tort is
committed. They are of various kinds:

Nominal damages:
Nominal damages awarded to an individual in an action where the person has not suffered any
substantial injury or loss for which he or she must be compensated.

This kind of damages reflects a legal recognition that a plaintiff's rights have been violated
through a defendant's breach of duty or wrongful conduct. The amount awarded is ordinarily a
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trifling sum, such as a dollar, which varies according to the circumstances of each case. In
certain jurisdictions, the amount of the award might include the costs of the lawsuit.

In general, nominal damages may be recovered by a plaintiff who is successful in establishing


that he or she has suffered a loss or injury as a result of the defendant's wrongful conduct but
is unable to adequately set forth proof of the nature and extent of the injury.

For example, an injured plaintiff who proves that a defendant's actions caused the injury but
fails to submit medical records to show the extent of the injury may be awarded only nominal
damages.

The amount awarded is generally a small, symbolic sum, although in some jurisdictions it may
equal the costs of bringing the lawsuit.

The most famous case of nominal damages was when Prime Minister Winston Churchill was
awarded a shilling (about 25 cents) in a libel lawsuit he had brought against author Louis
Adamic for writing that Churchill had been drunk during a dinner at the White House. The
Prime Minister was vindicated, but the jury could not find that his towering reputation had been
damaged.

In another case of Constantine v. Imperial London Hotels Ltd.[3], a West Indian cricketer was
refused accommodation at a London hotel because of his nationality. He stayed at another hotel
arranged by the defendants and he suffered no loss. It was held by Birkett, J. that nominal
damages of five guineas be awarded in respect of defendants’ breach of their common law duty
as innkeepers to provide accommodation for any traveler.

When a wrong is actionable per se, as for example, in the case of trespass, damage to the
plaintiff is presumed and an action lies even though in fact the plaintiff may not have suffered
any loss[4]. To justify the concept the nominal damages, Holt, C. J. said, “If a man another cuff
on the ear, though it costs him nothing, not so much as a little diachylon, yet he shall have his
action against another for riding over his ground, though it did him no damage; for it is an

3
(1944) K.B. 693
4
Dr. R. K. Bangia, The Law of Torts, (Allahabad Law Agency, 21st edition)
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invasion of his property and the other has no right to come here”.[5]

Contemptuous Damages:
Contemptuous damages are awarded when the level of harm caused to the claimant is low and
the court feels that the claimant was wrong to bring a claim. They are the mirror image of
nominal damages, in that the successful plaintiff is made to pay damages for bringing the
lawsuit.

Let us consider the example: Green and Brown are next-door neighbors who have never gotten
along. Green’s dog wanders onto Brown’s property one day and relieves himself. Brown steps
in the dog’s faeces, is disgusted, and sues Green for trespass and for failing to control his dog.
The court finds that Brown was technically legally correct and thus he must win the lawsuit,
but that the lawsuit was rather ridiculous and wasted everybody’s time. The court will award
damages in the amount of the smallest monetary amount, to make this statement to Brown.

Contemptuous damages are a derisory amount awarded to show disapproval at the bringing of
a claim. This is where a court awards a very small amount of damages to indicate the court’s
disapproval of the court action having been brought at all. This might be relevant in a
defamation action, where the court considers that the person bringing the action already has a
poor reputation, and that the false statement made about the person is unlikely to damage their
reputation much further.

It is to be distinguished from nominal damages because nominal damages are awarded when
the plaintiff has suffered no loss, whereas contemptuous damages are awarded when the
plaintiff has suffered some loss but he does not deserve to be fully compensated.

Compensatory Damages:
Compensatory damages are recovered in payment for actual injury, which does not include
punitive damages (to be discussed later). It is a sum of money awarded in a civil action by a
court to indemnify a person for the particular loss, detriment or injury suffered as a result of
the unlawful conduct of another. These damages provide a plaintiff with the monetary amount
necessary to replace what was lost and nothing more.

5
Ashby v. White, (1703) 2 Lord Rayam, 938, at 955
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One of the more heated issues facing the U.S. legal system during the past quarter century has
been the call for reform of states’ Tort Laws. Some Health Care providers and other
organizations have sought to limit the amount of damages a plaintiff can receive for pain and
suffering because they claim that large jury awards in Medical Malpractice cases cause
premiums on medical insurance policies to rise, thus raising the overall costs of medical
services. California took the lead in addressing concerns with rising medical costs when it
enacted the Medical Injury Compensation Reform Act, California Civil Code § 3333.2 (1997).
The act limits the recoverable amount for non-economic loss, such as pain and suffering, to
$250,000 in actions based on professional Negligence against certain health care providers.
Although the statute has been the subject of numerous court challenges, it remains the primary
example of a state's efforts to curb medical costs through tort reform.

Rules To Quantify Damages


Damages in case of Negligence (Hand Rule or Hand Formula):
Courts should develop theory and practice of damages for incompensable losses based on the
response of reasonable people to daily risks. Specifically, courts should compute damages
based on the reasonable person’s point of indifference between less risk and more expenditure
on precaution. The Hand Rule describes this point of indifference[6]. In its original notation, the
Hand Rule is based on the equation B=pxL, where “B” is the burden of precaution, “p” is the
reduction in probability of harm caused by precaution, “x” is the multiplication sign, and L is
“liability”. The equation describes the tipping point between negligent and non-negligent
behavior. If B equals or exceeds pxL, then behavior is non-negligent. If pxL exceeds B, then
behavior is negligent.

Hand Rule Damages have some normatively desirable properties, which are: -

· Hand Rule Damages cause a potential injurer to internalize the value of the reduction in risk
from his precaution. Consequently, Hand Rule Damages provide incentives for efficient
precaution. This fact may be decisive for legal scholars committed to economic or utilitarian
theories, but not to others.

6
Vorvis v. Insurance Corp. of British Columbia, [1989] 1 S.C.R. 1085, at 1098-99
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· “Internalization” means that potential injurers treat risks to others like their own risks.

· Hand Rule Damages ideally satisfy the principle of restorative justice, which requires people
to compensate others for harming them, including exposing them to the risk of in compensable
losses.

Hand Rule Damages are reasonable, although they are also too difficult conceptually for
common sense to encompass. Without this theory, however, the instruction to award reasonable
compensation is hardly better than the instruction to follow common sense. This rule should be
applied to damages rather that to standards. Computation of Hand Rule Damages begins by
identifying reasonable precaution against the loss that materialized. To illustrate, if the loss in
question is the wrongful death of a child, then the court must begin by identifying a reasonable
standard of care towards children. If the legal rule at issue is negligence, determining liability
requires the court to determine a reasonable standard of precaution. Consequently, the court
must identify a reasonable standard of precaution before turning to damages. If the legal rule
at issue is strict liability, then determining liability does not require the court to determine a
reasonable standard of precaution. Nevertheless, the court must determine a reasonable
standard of precaution in order to compute Hand Rule Damages. Having identified a reasonable
standard of care, the court can then plug its values into the Hand Rule to find damages.
Econometric estimates concern the average subjective cost of a risk among actual people who
face it, whereas Hand Rule Damages concern the reasonable person’s subjective cost of a risk.

Commentators sometimes ask whether this approach should be used to set damages. Landes
and Posner discussed this possibility briefly in their 1987 book on tort law and tentatively
conclude in favor of courts adopting this approach. The book read, “… this may be a feasible
as well as theoretically correct method of estimating tort damages. The tort system shows, as
yet, no signs of moving in this direction; it continues to be wedded to the pecuniary-loss
measure, which bears no necessary relationship to the economically correct measure.”[7]

7
U.S. v. Carroll Towing Co. 159 F.2d 169 (2d Cir. 1947)
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Damages in case of shortening of expectation of life:


The House of Lords laid down certain rules to determine the quantum of damages, in situations
where a person’s normal span of life is shortened due to the wrongs done by the defendant [8]:

· The test to determine compensation is not the length of time of life of which a person has
been deprived, but it should be the prospect of a predominantly happy life.

· The test of happiness of life is not to be subjective, i.e., how the deceased thought about the
chances of his own happiness, the test is an objective one.

· Very moderate damages should be should be allowed for an action under this head

· The economic and social position of a deceased has to be ignored in assessing such damages
as the happiness of life does not necessarily depend on such things.

Damages in case of death of a person:


Interest Theory: Here the dependents are paid such lump sum the interest from which would
be equivalent to the loss suffered by them.[9] It has to be seen as to how much interest a certain
amount will bring if invested in a fixed deposit. Thus if the loss to any dependent is assessed
at “x”, such sum could be awarded by way of compensation, which will fetch that much interest
every month to such dependent.

Multiplier Theory: According to this theory, the likely further loss is assessed by multiplying
the likely loss due to occur every year with a multiplier which indicates the number of years
for which the loss is likely to continue[10]. Certain factors like the age of the deceased and of
the dependent may have to be taken into consideration to determine the multiplier to be used
for assessing compensation payable. So, the value of the multiplier is decided on a case-by-
case basis.

8
W. M. Landes and R. Posner, The Economic Structure of Tort Law, (Harvard University
Press, 1987).
9
Benham v. Gambling, (1941) A.C. 157
10
Dr. R. K. Bangia, The Law of Torts, (Allahabad Law Agency, 21st edition), at 483.
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We can consider the case of State Farm Mutual Automobile Insurance Co. v. Campbell [11],
where the Utah Supreme Court decided on the quantum of damages to be paid using the
multiplier theory.

Other instances of damage calculation:


a) In some cases, the courts deduct a percentage of the capitalized amount in view of the fact
of uncertainties like the deceased or dependent’s chance of dying before the expiry of the years
for which the multiplier has been used.

b) While deciding on the quantum of damage under the (Indian) Fatal Accidents Act, 1855,
factors such as if the plaintiff was being supported by the deceased or had a legal claim to be
supported or if the plaintiff can claim damages when the deceased was not an employed person,
needs to be kept in mind.

11
Dr. R. K. Bangia, The Law of Torts, (Allahabad Law Agency, 21st edition), at 483.
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Chapter 4:

Types of Compensation: Compensatory, Aggravated and Exemplary


Damages

a. Compensatory (or Actual) Damages

Compensatory damages are recovered in payment for actual injury, which does not include
punitive damages (to be discussed later). It is a sum of money awarded in a civil action by a
court to indemnify a person for the particular loss, detriment or injury suffered as a result of
the unlawful conduct of another. These damages provide a plaintiff with the monetary amount
necessary to replace what was lost and nothing more.

In tort law, the terms “actual damages” and “compensatory damages” refer to the same thing:
money that the defendant pays to the injured plaintiff to cover the actual costs of the
plaintiff’s injury. A defendant does not have to pay these damages if, after a trial, a judge or
jury does not find that the defendant is legally responsible for the plaintiff’s injuries.12

If the defendant is found liable, however, the judge or jury will calculate the amount of actual
damages to award based partly on evidence of what the plaintiff’s actual out-of-pocket costs
were. Some of the more common types of evidence used to calculate actual damages include:

 Receipts or bills for medical care, including doctor’s visits, surgery, medications, or
medical equipment like wheelchairs, braces, or walkers;
 Bills or receipts for repairing equipment, vehicles, or other property damage in the same
accident that caused the plaintiff’s injuries;
 Paycheck stubs or other evidence of lost wages, or what the plaintiff would have made at
her job if she had not had to take time off work due to the injury;
 Receipts for in-home care or for services like cleaning or lawn care that the plaintiff could
not do on her own due to the injury.

12
What are Compensatory Damages, http://litigation.findlaw.com/legal-system.html
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Many other kinds of losses that can be paid for with an actual damages award also
exist. Since each injury case is unique, the evidence a plaintiff may use to show what her
losses were will also be slightly different with each case.

In addition to covering the bills the injury caused, the final actual damages amount usually also
includes an award for pain and suffering and loss of consortium, or loss of guidance, care,
and support. These losses are included in an “actual” damages amount because they are losses
the plaintiff and/or her family members actually suffered as a result of the injury. These
damages are also known as “hedonic damages” because they are based on the physical, mental,
and emotional health of the plaintiff and those close to her, rather than on a number on a bill
or receipt.

Damages awarded for pain and suffering are calculated based on evidence that the plaintiff
suffered or is suffering pain or other symptoms from the injury and how badly the plaintiff can
be expected to suffer in the future. Types of evidence used to come to a final “pain and
suffering” number include testimony from the plaintiff, her family, or physicians or therapists
explaining what the plaintiff can and cannot do after the accident and the effect it has had on
her physical, mental, and emotional health.

Serious injuries often leave behind permanent disabilities that can be very difficult for the
injured person to adapt to. Pain and suffering damages recognize that adapting is difficult and
that the injured person would not have to struggle to adapt if the defendant’s negligent, reckless,
or intentional misbehavior had not caused the injury.

Damages for “loss of consortium” and “loss of guidance, care, and support” are paid to the
injured plaintiff’s spouse and children, respectively. They may also be paid to other family
members, if they were dependent on or lived closely with the plaintiff when the injury
occurred. These damages compensate the injured person’s spouse for the loss of intimacy, as
well as the loss of help around the house or yard or in raising children.

“Loss of guidance, care, and support” usually refers to the loss children face when a parent is
severely injured or killed. These damages compensate the children or dependents for the love,
care, and guidance a parent or caregiver would have provided if the accident had not resulted
in the plaintiff’s disability or untimely death.
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Actual damages should not be confused with punitive damages, statutory


damages, or nominal damages, all of which may or may not be included along with actual
damages depending on the facts of a specific case. Punitive damages are designed to punish a
particularly bad-acting defendant, in order to deter him or others like him from behaving so
badly in the future. Statutory damages are set by law. Nominal damages are a small amount
that defendants may be required to pay if there were little or no actual damages; nominal
damages recognize that the defendant was responsible, even if no injury or property damage
occurred.

b. Aggravated Damages

Damages awarded by a court to reflect the exceptional harm done to a plaintiff of a tort action.
When insult or injury to the plaintiff’s feelings has been caused, the court may take into account
the motive for the wrong and award an increased amount of damages.

“Aggravated damages are an award, or an augmentation of an award, of compensatory damages


for non-pecuniary losses. They are designed to compensate the plaintiff, and they are measured
by the plaintiff's suffering. Such intangible elements as pain, anguish, grief, humiliation,
wounded pride, damaged self-confidence or self-esteem, loss of faith in friends or colleagues,
and similar matters that are caused by the conduct of the defendant; that are of the type that the
defendant should reasonably have foreseen in tort cases or had in contemplation in contract
cases; that cannot be said to be fully compensated for in an award for pecuniary losses; and
that are sufficiently significant in depth, or duration, or both, that they represent a significant
influence on the plaintiff's life, can properly be the basis for the making of an award for non-
pecuniary losses or for the augmentation of such an award.”[13].

Aggravated damages are an augmentation of general damages to compensate for aggravated


injury.

c. Punitive (or Exemplary) Damages

Punitive damages are triggered by conduct that may be described by such epithets as high-
handed, malicious, vindictive, and oppressive. They are awarded where the court feels that the

13
Huff v. Price 51 BCLR 2d 282 (BCCA, 1990), at 299
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award of compensatory damages will not achieve sufficient deterrence and that the defendant's
actions must be further punished. Punitive damages bear no relation to what the plaintiff should
receive by way of compensation. Their aim is not to compensate the plaintiff, but rather to
punish the defendant. ...They are in the nature of a fine which is meant to act as a deterrent to
the defendant and to others from acting in this manner. It is important to emphasize that
punitive damages should only be awarded in those circumstances where the combined award
of general and aggravated damages would be insufficient to achieve the goal of punishment
and deterrence.

As explained by McIntyre. J., "Punitive damages, as the name would indicate, are designed to
punish. In this, they constitute an exception to the general common law rule that damages are
designed to compensate the injured, not to punish the wrongdoer”.
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Chapter 5:
Similarities and Differences Among the Different Types of Damages

Compensatory Damages

As its name implies, "compensatory" means something that compensates for something else,
typically a loss of some sort. You may be eligible to receive money to compensate you for:

 Property damage
 Loss of enjoyment of life
 Current and future medical bills
 Current and future lost wages or lost earning potential
 Current and future pain and suffering or emotional distress
 Loss of consortium, or damage to your relationship with your spouse or children

This is the type of damages commonly awarded to victims of automobile accidents, slip-and-
fall accidents and other types of accidents caused by negligence and carelessness.

Calculating compensatory damages is a crucial skill for a lawyer. When necessary working
with specialists is required to ensure that no costs are overlooked. Adding up medical bills that
have already accumulated, for example, may be fairly straightforward. There is also need to
make certain that clients get compensation for future medical bills. That is where matters get
more complex. Clients should not have to worry about money running out before their medical
treatment and other costs are covered.

For example:
Alice is a self-employed business consultant. One day Alice visits Jane, one of her clients, at
Jane's office. Alice talks to Jane for an hour and then gets up to leave. She is heading to the
door when she slips and falls on a wet floor. Alice suffers a severe fracture of her right leg.
Alice spends several days in a hospital. She is unable to work for two months after she returns
home. Six months after her fall Alice sues Jane's company for bodily injury. A court awards
Alice $75,000 in compensatory damages. The money is intended to compensate Alice for the
monetary losses she has suffered as a result of her broken leg.
The damages include reimbursement for the following:
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 Past, current and future hospital, doctor, physical therapy and other medical expenses
to treat Alice's broken leg.
 Loss of income during the time Alice is unable to work. She also receives
compensation for customers she lost due to her injury.
 Cost of home visits by a nurse during Alice's recuperation
 Cost of services provided by a housekeeper and a dog walker during the period that
Alice is unable to perform these duties herself.
 Compensation for pain and suffering. Because her injury was severe, Alice has
experienced (and will continue to experience) chronic pain. The injury has also left
her with a permanent limp.
Jane has insured her company under a general liability policy. The firm's liability insurer pays
the $75,000 in compensatory damages the court has awarded to Alice.

Punitive Damages

Punitive damages are essentially used to punish the at-fault party for particularly outrageous
negligence or illegal activity that resulted in harm to someone else. The rationale is that if
someone has to pay a large amount of money, they may think twice before engaging in such
reckless behavior again. The negligent party may also face criminal prosecution.

Punitive damages are most commonly awarded in motor vehicle crash claims in which the
driver who caused the accident was drinking and driving. DUI is illegal, so paying punitive
damages to the victim is one of what will likely be many penalties the drunken driver will face
for his or her violation of the law. Punitive damages are in the hands of the court. The amount
is not calculated based on bills and lost wages like compensatory damages.

These damages are punitive in that they are intended to deter the defendant and others for
engaging in the kind of inappropriate conduct that formed the basis of the lawsuit. Essentially,
they are intended to make an example, and punish the defendant for behaviour that involved
cruelty, insolence, malice or a disregard for the plaintiff’s rights, to name a few.
I realise that there appears to be overlap, and the two definitions are quite confusing.
I suppose all you need to keep in mind, is that when it comes to aggravated damages, the
decision is made from the point of view of the plaintiff, assessing their intangible suffering at
the hands of the defendant.
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When it comes to exemplary damages, judges focus is shifted to the wrongful conduct of the
defendant.
For example:
Exemplary damages may be awarded to a defendant who, in vindictive revenge directed
towards the plaintiff, posted online intimate images or footage of their former partner online,
without their consent. This would be considered calculated, malicious conduct and outrageous
breach of the plaintiff’s rights, justifying punitive damages.

In the case of Huckle v. Money (1763) 2 Wils 205


An action for false imprisonment brought by a journeyman printer who apparently had played
no part in printing the famous issue No. 45 of ‘The North Briton’ but had been arrested under
a warrant issued by a Secretary of State authorising a King’s messenger to arrest the authors,
printers and publishers of that issue (without naming or identifying any of them), to seize all
their papers and to bring them before the Secretary of State to be examined by him.
Held: The court made an award of exemplary damages of £300.[14]

Aggravated damages

Aggravated damages: are essentially compensatory in nature, awarded to a plaintiff on a basis


of the intangible injury that has been caused to them. What is intangible injury?

Examples include
- Humiliation
- Damaged self-confidence
- Pain
- Anguish
- Distress
- Wounded pride
- Loss of faith in friends or colleagues
- Loss of reputation
These compensatory damages comprise of an additional sum paid to the plaintiff in
consideration of their humiliation or suffering due to the defendants conduct in the commission
of a wrong.

14
Huckle v. Money (1763) 2 Wils 205
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A related purpose mentioned in subsequent cases was to appease the victim and to discourage
revenge:

For example

In the case of Merest v. Harvey (1814), where the Judge more specifically referred to the
undesirable practice of duelling. Punishment and deterrence are of course purposes which are
served by the criminal law. The introduction of criminal law purposes into the law of torts did
not represent a new development, but reflected the common historical roots of the laws of tort
and crime. Both branches of the law being addressed in large parts to same type of conduct,
the modern separation of their different purposes and procedures was still being completed at
that time."[15]

15
Merest v. Harvey (1814) 5 Taunt 442
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CHAPTER 6:
CONCLUSION & SUGGESSTION
Conclusion
This analysis has greatly enriched our understanding of damage rules. It reveals that damages
serve a complex and multi-faceted role: deterring risk takers, helping victims spread risks and
compensating them for their losses. This has also helped us to design tort liability and design
rules, which can guide legislators and courts as they design tort liability and damage rules.
Thus the researcher concludes that there are indeed various guidelines which direct the courts
on the matter of fixing quantum and type of damages. But with reference to the scenario in
India it can be observed that law of torts is not that developed in our country leading to
irregularities in establishment and disbursement of compensation. As such the researcher’s
First Hypothesis stands Partially Disproven.

It is suggested that at present damage awards for serious personal injury and death generally
are not sufficiently large to induce potential injurers to take due care and engage in optimal
activity levels. Yet economic analysis also shows that victims of physical injuries may be
receiving too much compensation. Thus external factors indeed influence the type and quantum
of damages in many cases. Thus the researcher’s Second Hypothesis stands Proven. This
suggests decoupling of defendants’ liability from victims’ compensation should be considered.
While considering the situation in India, it can be seen that all the rules for the purpose of
damage calculation are not predominantly utilized. The Multiplier Rule is extensively used to
decide on damages in cases of death due to tort.

Suggesstion
The Law of Torts is not well developed in India as in countries like the United States of
America and the United Kingdom. Hence applicability of its various aspects is also limited in
the country.
Damages form a very integral part of Tort Law. The Legislature should come up with sufficient
and practical rules and theories for computation of type and quantum of damages. This will
lead to a decrease in ambiguities that we come across in various cases regarding the
establishment and calculation of compensation.
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CHAPTER 7:
BIBLIOGRAPHY

The researcher has consulted following sources to complete the rough proposal:

PRIMARY SOURCES:
1. Jurisprudence on the subject at hand.
2. Case Laws related to the subject at hand.

SECONDARY SOURCES:
1. BOOKS:
a. W. M. Landes and R. Posner, The Economic Structure of Tort Law, Published
by Harvard University Press, (1987)
b. R.K. Bangia, Law of Torts with Consumer Protection Act, Published by
Allahabad Law Agency, Edition: 21st (2016)
2. WEBSITES:
a. http://www.duhaime.org/
b. https://academia.edu
c. https://scribd.org
d. https://legalservicesindia.com
among others

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