Law

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What are Actual Damages?

Charity Delich

Last Modified Date: February 25, 2024

In law, actual damages refers to money that is awarded to a plaintiff during a civil lawsuit. The damages are usually intended to serve as compensation for losses that the plaintiff has suffered as a result of a defendant’s actions or inaction. The amount of money given to the plaintiff usually correlates with the amount of harm, injury, or loss the plaintiff was able to prove he or she sustained. Actual damage awards are commonly referred to as compensatory damages.

As a general rule, actual damages are capable of being precisely measured, and are awarded in both tort and breach of contract cases. In a tort lawsuit, they may include the plaintiff’s expenses, such as medical bills, and loss of income due to an injury. They can also include expenses related to repairing or replacing property that was destroyed by a defendant. In a breach of contract claim, actual damages may be awarded for losses occurring as a result of a defendant failing to fulfill a contract. Actual damage awards are typically limited to the amount of money needed to make the injured party whole.

Actual damages are only awarded when the plaintiff suffered legally valid harm, such as a broken leg.

In most jurisdictions, actual damages are viewed as income to the plaintiff for tax purposes. As a result, they are normally taxable and must be reported as income. Some jurisdictions do not tax certain types of actual damages, such as a personal injury award.

In order to receive an actual damage award, a plaintiff generally needs to prove that he or she suffered a legally valid harm, such as a broken leg, as a result of a defendant's negligent driving. In addition, the plaintiff must prove that a particular amount of money will be adequate compensation for the injury. A judge or jury usually determines the amount of money awarded to the plaintiff.

Actual damages include the cost of repairing a wrecked vehicle and medical bills from injuries sustained in an accident.

Actual damages are distinct from nominal damages and punitive damages. Nominal damages are a trivial sum of money that is usually granted in circumstances where the plaintiff suffered no real loss. Despite this, a defendant may be required to pay the plaintiff a small amount of money for the purpose of recognizing that a legal injury was in fact sustained by the plaintiff.

Rather than compensating a plaintiff, punitive damages are intended to punish a wrongdoer and deter others from engaging in similar wrongful behavior. They are commonly awarded in tort cases, as opposed to contract cases, where a defendant has acted recklessly or with malice. Courts may award punitive damages in addition to actual damages.

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Discussion Comments

Reminiscence

May 9, 2014

I won a civil lawsuit against a negligent driver a few years ago, and the judge awarded compensatory damages and personal injury damages. The judgment was enough to pay off my hospital bills and buy a car similar to the one that was totaled. I thought the judgment might include economic damages like loss of income, but the judge determined that my medical insurance coverage and my company's generosity covered those special damages.

Ruggercat68

May 8, 2014

I watch a lot of those television judge shows, and the judges always talk about making a plaintiff "whole". They'll usually get bills and receipts from the plaintiff and add them all up to determine actual damages. The idea is to award just enough money to restore the plaintiff to where he or she was before the defendant did whatever he or she did.

Compensatory damages may go to the higher end of reasonable, but they aren't designed to make anyone filthy rich. A plaintiff will get enough money to repair or replace the car that was wrecked, not to buy a Cadillac or a Ferrari.