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Punitive damages, also known as “Exemplary damages”, are damages that a court may order for a defendant to pay if the defendant’s actions were intentionally reckless. These damages are a monetary award ordered to be paid to the plaintiff in a civil law suit. Punitive damages are not the same thing as actual damages. Actual damages refer to money that is paid to the plaintiff by the defendant to cover the actual cost of medical bills, as well as calculated pain and suffering. The court awards punitive damages to punish the defendant not to compensate the plaintiff. However, these damages may also be awarded if the court believes that the plaintiff was not properly compensated by the actual damages.

Punitive damages are more often than not restricted to tort cases. However, contract cases do not usually receive punitive damages, unless the contract involves a dispute over coverage pertaining to an insurance contract. According to the U.S. Department of Justice, only two percent of torts cases involve punitive damages and the average award is less than fifty thousand dollars. Nevertheless, in Philip Morris U.S.A v Williams, Jesse Williams was a heavy cigarette smoker and it ended up killing him. His wife sued Phillip Morris, the manufacturer, for negligence to provide facts about potential health issues directly related to smoking cigarettes. The jury found the defendant guilty of deceit and awarded 79.5 million dollars in punitive damages.

Actual damages and punitive damages should not be confused as the same thing. Actual damages pay for all of the costs caused by injury, while punitive damages are awarded to punish the defendant for an excessive reckless act.