Compensation in a GSB is a provision where the seller promises to pay money to the buyer upon the arrival of a particular event in order to compensate for the loss suffered after the acquisition, either by the buyer, the target company, or both. If the target buyer or company could eventually assume a liability that should reasonably be borne by the seller, a well-developed compensation clause will provide compensation to the party who would suffer the loss and thus provide the parties with the opportunity to share the risks in a share sale. Compensation is a company`s commitment to compensate for losses, liabilities or damages suffered by another person as a result of an act or omission by a person or third party or event. Section 124 of the Indian Contract Act, 1872 (Contract Act) defines a «compensation contract» as a contract by which one party promises to save the other party from the loss it suffered by the behaviour of the Promisor itself or by the behaviour of another person. However, this is not a comprehensive definition of compensation and, therefore, the compensation clauses in stock purchase contracts (BSBs) may, in accordance with common law principles, have a broader scope than those provided for by the Contract Act. In addition, even if a fee is greater than the de minimis amount, a threshold (or basket) may be regulated under the GSB, which must be reached as a whole to allow the buyer to make a claim against the seller. In such cases, it is stipulated that the seller is not held liable for claims, unless the total amount of that claim and all other claims under the GSB (each exceeds the de minimis amount) exceeds a certain percentage of the purchase price. It is up to the parties to negotiate whether the seller`s liability is limited to the amount whose total amount exceeds the threshold or if he is responsible for the entire amount and not just the top. Finally, indemnification clauses govern cases where the seller is not held responsible for the buyer`s claims. To the extent that the debt is the result of a deed, omission or transaction of the buyer after the reference date or, if necessary, is increased by the creation or, if necessary, the increase in the fee; (ii) any change in the law or its generally accepted interpretation, including new taxes after the reference date; (iii) a breach by the purchaser of its obligations under the GSS; (iv) an act or omission by the seller that was made at the buyer`s request; (v) cases, facts or circumstances that were disclosed to the purchaser in the data room, in the accounts or elsewhere, or that were publicly available prior to the signing of the G.S.O.; (vi) matters for which a provision or surcharge has been granted in the company`s accounts as served on the purchaser.