Definition: Money awarded to compensate an injured party for a legally recognized loss, rather than to punish the wrongdoer.
Example
A court awards proven losses caused by a breach, subject to the applicable legal rules.
Keep the distinction clear
Compensatory damages differ from punitive damages and from a contract's agreed liquidated-damages provision. A claimant must establish the required basis and amount.
Related terms
Damages · Liquidated Damages · Contract
Keep studying
References: Cornell Legal Information Institute: compensatory damages
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