What Does Indemnification Agreement Mean

In order to attract highly qualified professionals to a board of directors, it is customary to have a compensation agreement. The compensation agreement protects the board of directors from debts, losses and shares that may result from activity on the company`s board of directors. To explain a compensation agreement, it is first necessary to define the concept of “compensation”. Compensation is defined as “the obligation to obtain losses, damages or liabilities incurred by another (Black`s Law Dictionary). Compensation has the general importance of “keeping it unscathed,” i.e., one party considers the other to be harmless for loss or damage. Some variations of meaning for the concept of “compensation:” In addition, a compensation clause will generally contain a language on how claims are claimed and paid. Clauses can easily be one or two pages long. In short, the instalment of compensation can be long and difficult to read. That does not excuse you to understand.

But more importantly, don`t try to navigate these clauses on your own. Lock up your lawyer to create a compensation clause that matches your business. When drafting a contract, it is important to include provisions that benefit all parties as equally as possible. To ensure that you are not exploited in an agreement, it is best to consult a legal expert, preferably an expert in contract law. He or she may explain confusing legal terms, so you are fully aware of what you agree. Although compensation agreements have not always had a name, they are not a new approach. Historically, compensation agreements have helped to ensure cooperation between individuals, businesses and governments. Compensation may take the form of cash payments, repairs or replacements or any other means agreed between the parties. Before obtaining a bond, the subjects must sign a compensation contract. This protects the bonding company in the event of a loss or warranty. (Learn more about guarantee loan compensation contracts) If the exempt takers can negotiate a limitation of liability in their contract, this limits the cost of any compensation if they “specify in the agreement only liability restrictions (in the form of caps or exclusions from certain types of damages – for example. B consecutive damage) to …

Compensation. [28] Suppose you pay for accident insurance on your car. The usual agreement is that the insurance pays for repairs or even a replacement of your car (or the other person`s car) in the event of an accident. In this case, the agreement is that your insurance company will pay for any financial hardship you have suffered as a result of a car accident in exchange for a bi-simple or monthly premium that you pay it. In 1979, the Minnesota Supreme Court ruled that a subcontractor should compensate the contractor for the damage he caused, pursuant to a compensation clause in their order. [20] Compensation is different from a guarantee, i.e. a third party`s promise to meet the obligation of one of the parties if that party is unable or unwilling to do so (as a general rule, a guarantee is limited to a debt obligation).