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Simple English definitions for legal terms
damages clause
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A quick definition of damages clause:
A damages clause is a part of a lease agreement for oil and gas operations. It requires the person leasing the land to pay the owner for any damage caused to the surface of the land during the operations. This clause may specify the type or amount of damage that must be paid for. It is also called a surface-damage clause or location-damage clause.
A more thorough explanation:
A damages clause, also known as a surface-damage clause, is a provision in a lease agreement that requires the lessee to compensate the lessor or surface-interest owner for any damage caused to the surface as a result of oil and gas operations. This clause specifies the kind or degree of damage that the lessee is responsible for paying for.
For example, if an oil company leases land to drill for oil, the damages clause may require them to pay for any damage caused to the surface, such as soil erosion, damage to vegetation, or disruption of wildlife habitats. The clause may also specify the amount of compensation that the lessee must pay for each type of damage.
The damages clause is important because it protects the lessor or surface-interest owner from any harm caused by oil and gas operations. It ensures that the lessee is held responsible for any damage they cause and provides a means for the lessor to be compensated for any losses.