VocabuLaw

Compensation

What is it and what does it mean?

Description of the legal term Compensation:

Compensation is a sum of money awarded to an individual or entity to make up for loss, injury or suffering. This legal concept is fundamental to several areas of law, including tort law, employment law and contract law. Compensation is intended to put the injured party, as far as money is concerned, back in the position he or she would have been in had the damage not occurred.

The amount of compensation is usually determined by the extent of the damage or loss suffered and can cover various aspects such as physical injury, emotional distress, loss of earnings, property damage and medical expenses.

Legal context in which the term Compensation may be used:

Personal injury compensation
John is injured in an accident at work due to the negligence of his employer. He suffers a back injury that requires medical treatment and causes him to miss several months of work. John files a personal injury claim against his employer. The court or settlement process determines the amount of compensation John should receive, including reimbursement for his medical expenses, compensation for his physical and mental suffering, and replacement of lost wages while he recovers. The aim is to compensate John financially for the various ways in which the injury has affected his life.

Breach of contract compensation
A company, ABC Ltd, enters into a contract with a supplier, XYZ Corp, for the delivery of goods by a certain date. XYZ Corp. fails to deliver the goods on time, causing ABC Ltd. to lose a lucrative contract with a customer. ABC Ltd sues XYZ Corp for breach of contract. The court assesses the financial loss suffered by ABC Ltd as a result of XYZ Corp’s failure to fulfil the contract and awards compensation accordingly. This compensation is intended to cover the loss of revenue and any additional costs incurred by ABC Ltd as a result of the breach.

This website is for informational purposes only and may contain inaccuracies. It should not be used as a substitute for professional legal advice.