Punitive Damages System

According to the basic concept of compensation damages, both tort liability and the liability of breach of contract are compensatory damages. Although compensatory damages is sanctionative, it is limited by the factual damages of victims when confirming concrete damages amounts. Punitive damages breaches this concept. It sentences extra damages to inflicters besides remedying the victims' damages because of the tort or breach of contract. The aim of the extra damages is not to make up the victims' damages, but to punish the inflicters. But the system of punitive damages doesn't deny the traditional rationality of compensatory damages, it is to perfect the extra system of damages besides the general system of damages compensation.Punitive damages is usually used in common systems, especially in the American law. Along with the amalgamation and mutual use for reference, the civil law system gradually recognizes this system. The Article 49 of The Consumer Protection Law in China first establishes the system of punitive damages. This rule has developed a positive role in protecting the consumers' rights, making the operators observe the rules of competition and building the orderly market economy, but its design has some limitation. China is deeply influenced by the civil law system, but we should introduce and rebuild this system in a more opening sight, which is essential to perfect our damages system to make our law link up the international law. This paper first reviews the historical development progress of punitive damages, which is the base of some academic analysis in this paper. There are broad sense and narrow sense in the definition of punitive damages, and this paper supports the narrow sense of it. The punitive damages means that based on the specific illegal actions of inflicters, the court sentences the inflicters to pay for damages beyond the actual damages to victims. Different from the compensatory damages and the spirit damages, it has the function of compensation, punishment, deterrent, prompting etc. Those viewpoints that is against using punitive damages in civil liability have somepersuasion, but they can't deny the value of punitive damages.The Article 49 of The Consumer Protection Law in China about punitive damages has some shortage. For example, the applicable subjective domain is too narrow, the rules of damages radices isn't exact and the rule of damages amount is too simple. Through the analysis of the experience in common systems and the practice of correlative rules in China, the paper builds the system of punitive damages in order to protect the development of market economy in the field of tort liability and the liability of breach of contract. In the field of tort, punitive damages can be added in the product liability, tort of business secret, tort of environment. In the field of breach of contract, punitive damages can be used in the purposive breach, possible escaping the liability of breach and the serious inequality of two sides of the contract. The amount of damages is the key to exert the function of punitive damages, so the paper discusses the influencing factors of it.