Traditionally, the right to be paid damages under Mexican law was understood by the judiciary as a compensatory measure in favor of the victim of a breach of contract or an illicit act in order to compensate it for the actual harm suffered, either of a material or moral (intangible) nature.

Accordingly, the victim was required to prove, in addition to a breach of contract or an illegal conduct attributable to other person, the quantum (or significance) of the damage, which was the only parameter for determining the amount of the compensation.

However, recent certain criteria issued by the Mexican federal courts[1] have shown a new trend of interpretation of Article 1916 of the Federal Civil Code regarding the concept of damages, under which it has been considered that the compensation to the victim is no only intended to repair the damage suffered in its assets, property, feelings, emotions, beliefs, honor, reputation, private life, physical appearance, or the consideration that others have of the victim, but also to punish the misconduct or neglect of duty of care in which the liable person has incurred.

In other words, the recent criterion of the Mexican courts is that the liable person should not be only ordered to repair the actual damage caused to its victim, but also it shall be punished for its carelessness when it has a duty of care.

Under this new criterion, the person that, given the nature of the services performed, is required, either by law or by the general obligation of diligence, to keep a duty of care towards their customers, may be subject to punitive damages which go beyond the mere compensation to the victim.

The rationale is that when someone is ordered to pay for actual and punitive damages for its omission or negligence in its duty of care, not only the victim’s harm is compensated but a "social compensation" is also achieved through the deterrent effect on this kind of anti-social conduct.

Additionally, Mexican courts have determined that the order to pay punitive damages does not generate an illegal enrichment because the compensation is fully justified since there is an unlawful conduct or omission of duty of care that generated harm to the victim.

Under this new construction of the law on damages, the courts have ruled that in order to establish a fair compensation, the following elements shall be considered: i) the rights violated; ii) the degree of liability; iii) the economic situation of the liable person and iv) any aggravating circumstance that could be considered to determine the degree of liability.

In conclusion, the new trend of interpretation of the courts in Mexico in connection to damages is that in addition to compensate the victim’s actual damages, the liable person may also be ordered to pay punitive damages aimed to penalize its breach to its duty of care. This for benefit of the society in general and to prevent that such an infringement is repeated on future occasions. This compensation is regardless of the payment that the offender should made to the victim as a direct consequence of the damages caused.