What is the primary purpose of a declaratory judgment?

The primary purpose of a declaratory judgment is to clarify the legal rights of the parties involved. This type of judgment allows individuals or entities to seek a court's determination on the interpretation of a law, a contract, or their legal status, without requiring that there be an ongoing breach or injury. The outcome provides parties with certainty regarding their legal standing and helps avoid future disputes by establishing clear legal boundaries.

In essence, a declaratory judgment acts as a preventive measure, giving parties the opportunity to clarify their rights and obligations before any conflict arises, which can lead to better compliance with the law and reduce litigation costs in the long run. For example, if two parties interpret a contract differently, a declaratory judgment can help resolve this ambiguity before any further actions are taken.

The other options provided do not accurately capture the fundamental nature of a declaratory judgment. While setting claims quickly, enforcing contracts, or ordering compensatory payments pertain to other legal remedies or procedures, they do not specifically relate to the role of a declaratory judgment in establishing legal clarity.