Comparative Analysis of Liquidated Damage and the Punitive Damage

In many legal systems of the world, liquidated damage has an almost fixed meaning and is a price which parties set, so that in case of a breach on the part of the warrantor), s)he pays it to the warrantee. On the other hand, the punitive damage is a kind of damage which the court condemns the agent to pay in case of attaining a bad faith, intention or negligence on his/her part; thus, unlike liquidated damage, is more deterrent than remedial. Different legal systems of the world face them variously; such that these two entities in some countries like the United States are used widely and sometimes in some countries like England have faced limitations. In the Iranian legal system, the punitive damage is only issued in international actions and in reciprocity. So in internal claims, entities like liquidated damage, moral damage, late payment damage or even atonement have to be used. Despite this, in some cases none the aforementioned entities is a suitable substitute and in the Iranian internal law the need to establish the punitive damage entity is felt. Although liquidated damage has sometimes penal and remedial aspects, due to the actual damage being less than the liquidated damage, these two entities have several differences; including the fact that the punitive damage, unlike liquidated damage, cannot have remedial aspect. Also, the court adjusts the amount of the punitive damage not the parties, and there is no need for attaining a kind of intention or bad faith.