A lawnmower company signs a contract with a landscaper to sell lawnmowers for lawn care services. The manufacturer seeks a compensation clause in the contract to protect the manufacturer from loss or prosecution in the event of injury to a landscaper`s employee while using a lawnmower. The landscaper compensates the mower manufacturer for loss or injury. A person may attempt to be compensated for his duty or activity in the course of his activity. But compensation does not end in illegal acts such as theft, harassment and fraud. In another example, contractors can purchase liability insurance for professional liability. Compensation insurance can protect freelance writers. For example, compensation clauses or agreements in construction contracts are an attempt to protect the contractor from lawsuits and losses due to negligence. Example 1: Here is an example of a simple compensation clause in a contract: a company`s financial advisor may have made a mistake in a major financial report. The officer may be protected (compensated) against a complaint for this error. But if the treasurer was diverting money from the company, it is a crime and there is no protection against compensation. Compensation may also relate to a statutory exemption from loss or damages, as in the case of a compensation clause in a contract in which one party agrees to take responsibility for the loss or damage of another party. In this case, compensation has the general meaning of “keeping it unscathed.” A compensation agreement is sometimes referred to as a termination contract because it attempts to ensure that one party does not seek to sue another party for negligence.
Compensation agreements are complex, laws differ from state to state, and this section is not intended as legal advice. Talk to a lawyer if you are considering including a compensation contract in a contract. However, a typical compensation clause may also indicate that these individuals are not entitled to damages for gross negligence, wilful misconduct or breach of contract provisions by the individual. Example 2: Many states contain a compensation clause in the submission of the statutes (the document used for the registration of a capital company with a state). These standard compensation clauses are designed to protect the company`s directors, officers, employees and agents.