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An ex gratia payment is a voluntary payment made as a favor or goodwill gesture without admitting liability. Governments and companies may offer them, and they do not create legal relationships. Accepting such payments does not prevent legal action.
An ex gratia payment is an offer of money extended without admitting or creating liability or obligation. This term is Latin for “from the favor,” an accurate description of this type of payment; they are made as a favor or goodwill payment in the interest of providing compensation without creating a legal entanglement. When people accept ex gratia payments, they do so with the understanding that the person providing the payment is not creating a legal relationship, admitting guilt or accepting an obligation.
A common example of an ex gratia payment is an extra payment made to an employee when they are terminated. A company may offer benefits beyond those required by law as an expression of gratitude for service or to compensate for job loss. The company does not admit wrongdoing by offering this expression of goodwill, and the employee may choose to withhold payment if there is a compelling reason to do so.
Governments sometimes provide compensation following accidents and disasters in the form of such payments. The government is not indicating that it will provide future support to the people, nor is it claiming responsibility for the events. The funds are offered as an ex gratia payment to compensate people for their unpleasant experiences. Accepting such payments does not mean that people cannot sue the organizations or individuals involved.
Depending on the nature of an ex gratia payment, the money may come with a legal document that people must sign. The document explains the terms of the payment, noting that the offer of money, accepted or not, does not constitute the creation of any type of legal relationship. People should read the documentation carefully, as accepting money can trigger clauses like not discussing a situation publicly. If a contract is confusing or people have questions, they can request a copy for review and take it to a lawyer for closer inspection before making a decision on what to do.
The concept of ex gratia also arises in the sense of other legal situations in which people do something voluntarily, often in the interest of benevolence or good will. In addition to an ex gratia payment, people can also provide information without being obliged to, or they can offer services without being obliged to. A telephone operator, for example, might waive rates for people in need, even if it doesn’t have to.
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