What type of damages are awarded to a party as a form of reparation for losses incurred?

Compensatory damages are awarded to a party to compensate for losses or injuries incurred as a result of another party's actions. These damages aim to restore the injured party to the financial position they would have been in had the injury or loss not occurred. They encompass both actual costs, such as medical expenses or lost wages, and other quantifiable losses that can be attributed to the wrongdoing.

In contrast, punitive damages serve a different purpose, as they are designed to punish the wrongdoer and deter similar conduct in the future, rather than to compensate the victim. Consequential damages refer to losses that are not the direct result of a wrongful act but arise indirectly from it; they tend to involve future losses that are more difficult to quantify. Nominal damages are awarded when a legal wrong has occurred, but there is no substantial loss to compensate for, serving more as a recognition of a legal right than a compensation for loss.

Thus, the focus on compensatory damages highlights their primary role in the legal system as a mechanism for providing financial reparation to those who have suffered losses, making it the correct answer.