The most common case of a company that has compensation agreements is construction. But any company with employees can require those employees to sign a compensation agreement to protect themselves from lawsuits. Car rental companies also use compensation agreements to protect against complaints of accidents involving drivers of rental cars. Compensation is common in agreements between an individual and a company (for example. B an agreement for the purchase of car insurance). However, it can also be applied on a larger scale to relations between business and governments or between governments of two or more countries. It is a written compensation agreement that generally specifies the conditions to which the parties concerned must comply. These include insurance compensation contracts, construction contracts, agency contracts, etc. Compensation is different from a guarantee, i.e. the promise of a third party to meet the obligation of a contracting party if the contracting party is unable or unwilling to do so (generally, a guarantee is limited to a settlement obligation). This distinction between compensation and warranty was already discussed in the 18th century at Birkmya v Darnell.
 In this case, where it was a guarantee for the payment of the goods and not for the payment of the rent, the judge stated that a guarantee actually states: “Let him have the goods; If he doesn`t pay you, I will.  It is customary for company statutes to contain provisions such as compensation, but many directors may wish to go further and have a specific agreement which, for whatever reason, cannot be amended or deleted. The agreement is a bilateral contract directly between the director and the company. To simplify, compensation is safety or protection from loss. Compensation is most often referred to as “compensation,” usually with respect to the action. Damage insurance is a way to protect against claims or lawsuits. This insurance protects the holder from paying the full amount of a transaction, even if it is his fault. Many companies seek compensation for their directors and executives because complaints are common. It covers legal fees, legal fees and transactions. Compensation is widespread in most agreements involving an individual and a business; However, it also applies to businesses and governments or between governments in different countries.
This provides financial protection to cover costs in the event of negligence, error, accident or unavoidable circumstances that could seriously affect trade flows. In some cases, the risk of loss due to an infringement may exceed the price of the contract and the compensated party cannot afford unlimited compensation. For this reason, the parties will often negotiate to limit the liability of the compensated party by limiting it to a certain amount or limiting it to certain circumstances. Compensation means security or protection from financial liability. It usually takes the form of a contractual agreement between the parties, in which one party agrees to pay for the losses or damages suffered by the other party.