PandaTip: An example where this agreement can be useful is that one party uses the property of another party for a function, and that latter party does not want to be responsible for what may happen in the function. In this case, the «description» above «would use the property of the compensated party in X to host a function… ». What is a compensation agreement? A compensation contract is a contract in which the parties agree that the other is «free» of loss or damage, or where the parties agree that the other party is legally exempt from loss or injury. In 2010, the Colorado Supreme Court asked for a flower shop to compensate its mall for a customer who slipped into the florist`s faultless icy parking lot because the tenant was there to visit that store, and the store`s lease had a broad compensation clause.  Companies that offer the public somewhat dangerous activities (skiing, paring, amusement parks) require members of the public to sign a compensation agreement that frees the company from liability in the event of an accident. In reality, if the business is considered negligent (defective equipment, poor maintenance), the person who was injured still has a lawsuit against the company. In the case of a contractor of a owners` association (HOA) where «the contractor compensates the association, defends it (by a lawyer reasonably acceptable by the association) and considers the association unscathed.  Companies and HOAs also use compensation to protect directors, as few would act as directors if their risks were not compensated.  Negotiations are important for both sides. «Almost all administrative contracts of the owners` association have a provision stipulating that the HOA compensates the administrator in certain circumstances… There are many ways to develop the compensation clause, and management and the AAS must consider what protects the best.  When a contract is non-negotiable (contract of liability), the text often makes the recipient of the exemption decide what to spend on court costs and charge it for compensation.  Most of the clauses are fairly broad.
  Below are examples of compensation requirements for a number of companies.