Ex-Gratia payments are payments made without an obligation to pay. The words mean 'out of favor or out of gratitude' Insurance Companies often make ex-gratia payments with an accompanying letter marked 'Without Prejudice' These payments are made without the payer recognizing any liability to the recipient of the funds.
The point of the payment is to practice benevolent discretion in business rather than wander into a litigious situation that will involve legal fees and the identification of blame. In other words it is a blame free settlement.
This is a similar agreement to the 'No Fault Divorce' initiated in the United Kingdom about forty years ago.The requirement for divorce was satisfied by the spouses agreeing to divorce and living separate lives for a set period of time.
Many who enter into litigation stop part-way to negotiate a settlement outside of the courts. Once litigation has commenced this settlement has to be referred back to the Courts for the consent of the Court. The idea of an Ex-Gratia payment is to prevent litigation before it begins. 'Moving On' is a more modern phrase for these events. Ex-Gratia does not exclude the possibility of legal action by either party at a later date if fault is found in the payment. means by which the amount of the payment was determined or either party to the payment.
Ex-Gratia payments are often the means by which the Crown will effect settlements without admitting to error. For example the Crown, or its agents, may appropriate property without payment, but it is a practice that is heavily frowned upon. Traditionally the Crown requests, as in the case of Dunkirk, or appropriates with a promise to pay.
The Crown's request for a flotilla of small boats and their owners to sail the English Channel and bring home the British Expeditionary Force while at risk of death and loss was one in which no recompense could be promised. This was because the whole nation faced invasion and death. Reasonable circumstances must apply to all payments and promises to pay. Invasion and death are beyond reason. The ex gratia payment or offer of payment is frequently used to recognize the presence of a possible issue, tidy up loose ends and file the paperwork.
The Crown is required to act with benevolent discretion at all times and must provide the necessaries of life. Therefore ex gratia payments are favored by th Crown and its agents in large and small instances. Presently the Chinese who built a railway across Canada at huge expense to life and limb are being compensated for the head tax imposed upon them as migrants to Canada. In lesser cases such as requests or orders to temporarily evacuate property for any purpose, expenses are agreed upon or appropriate alternate provision made.
In ancient times a request for assistance in any form by the Crown was a guarantee of wealth. The same applied to lesser persons, and so the policy was handed on to Insurance Companies and other private persons and businesses in the form of ex gratia payments. In other words - No Blame but payment is made.