In the law of torts, the Court while awarding damages to the injured person makes all the possible effort to ensure that the amount or quantum of damages is optimal. It means that the damages awarded by the Courts should be reasonable and sufficient and neither insufficient or over-compensation is given to the claimant.

In determining the optimal damages the following factors are considered by the Court:

• The nature and extent of the injury.
• Whether the liability of the defendant is vicarious or not.
• The relationship between the plaintiff and the defendant.

Thus after considering the relevance of these factors the Court decides the damages which have to be paid by the defendant in case he is found guilty of tort against the plaintiff.

Nominal damages are those in which even though the plaintiff has suffered a legal injury at the hands of the defendant, there is no actual suffered by him. These damages are provided in the cases of Injuria sine damno in which the Court recognises the violation of the right of the plaintiff but the amount of damages are so nominal or low because of no actual loss to the plaintiff.

In these type of damages, the Court recognises that the right of the plaintiff is violated but to show that the suit brought by the plaintiff is of such a trivial nature that it has only wasted the time of the Court, the Court awards a meagre amount to the plaintiff as damages. This is similar to the nominal damages but the only difference between the two is that in nominal damages the plaintiff suffers no actual loss and in contemptuous damages, the plaintiff suffers actual damage but it is a trivial one in which he does not deserves to be fully compensated.

Compensatory damages are awarded to help the plaintiff to reach his original position at which he was before the tort was committed against him. These damages are not awarded to punish the defendant but to restore the plaintiff to his previous situation. These damages are very helpful in cases of monetary losses in which the amount of loss can be easily calculated and therefore that amount can be ordered to be paid to the plaintiff so that he can replace the damaged product or goods with such amount.

These damages are awarded for the extra harm which is caused to the plaintiff which cannot be compensated by the compensatory damages and it is given for factors such as the loss of self-esteem, pain and agony suffered by the plaintiff etc. which cannot be calculated in monetary terms. These damages are therefore additional damages which are awarded to the plaintiff other than the damages awarded for his pecuniary loss.

These damages are also known as exemplary damages and the purpose of these damages is to punish the defendant and to make an example of him so that others are deterred from committing the same act as he did. Thus, whenever a Court feels that the act of the defendant was severely gross, it awards punitive damages against him to the plaintiff.