Compensation

Compensation in foreign trade refers to the act of paying money or providing other remedies to the injured party due to breach of contract, damage to goods, delayed delivery, or quality issues. Usage scenarios include: the buyer rejecting goods and claiming compensation because the seller's delivery does not conform; the seller demanding compensation because the buyer fails to open a letter of credit on time, causing goods to be stranded; and claiming compensation from the carrier for loss of goods during transport. Precautions: the compensation amount is usually limited to actual losses and must be supported by evidence; the contract should clearly specify compensation clauses, claim periods, and applicable law; note the difference from 'penalty,' which is punitive, whereas compensation is based on the principle of reimbursement; and it differs from 'claims settlement,' which is the process of handling a claim, while compensation is the result. In addition, force majeure events may exempt compensation liability and should be stipulated in the contract. Foreign trade practitioners should keep written records, inspection reports, etc., to facilitate obtaining compensation.