What type of damages are awarded to set an example of the wrongdoer?

The correct answer pertains to the type of damages awarded as a means of setting an example for the wrongdoer to deter similar conduct in the future. These damages, known as punitive damages, are not intended to compensate the victim for their losses, but rather to punish the offending party for particularly egregious or malicious behavior.

In legal terms, punitive damages serve as a form of punishment that goes beyond mere compensation for actual losses. They are awarded in cases where the defendant's actions are found to be reckless, intentional, or of a nature that warrants additional consequences to discourage the behavior. This function aligns with the principle of deterrence, aiming to not only address the specific case but also to contribute to broader societal norms by discouraging similar actions by the wrongdoer and others.

Compensatory damages focus on making the injured party whole for their actual losses, while liquidated damages refer to pre-determined contractual penalties for breaches that are agreed upon in advance. Although exemplary damages might seem relevant because they indicate talking about setting an example, they are effectively synonymous with punitive damages in most contexts, cementing the classification towards the latter as the more widely recognized term within the legal framework. Overall, punitive damages play a crucial role in the legal system by