What is the purpose of punitive damages awarded by a court?

Punitive damages serve a specific purpose in the legal system primarily focused on deterring future unlawful behavior. Unlike compensatory damages, which aim to reimburse the victim for actual losses incurred, punitive damages are intended to punish the wrongdoer for particularly egregious or reckless actions and to discourage similar conduct by others in the future.

When a court awards punitive damages, it reflects a societal interest in holding individuals or entities accountable for their actions, especially when those actions are found to be willfully negligent or malicious. This type of legal remedy sends a strong message that certain behaviors, such as fraud or gross negligence, are unacceptable and will result in significant penalties, thereby promoting lawful conduct and protecting public interest.

In contrast, options related to compensation for actual losses, funding legal fees, or maintaining business relationships do not encapsulate the primary function of punitive damages, which is fundamentally rooted in deterrence. Hence, the emphasis on future conduct and the collective benefits to society underpin the rationale behind awarding punitive damages.