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I know there's a word for this but can't remember it. Can someone please help me figure this out.

It also means, amount paid to a king after winning a war by the defeated king.

Thank you :)

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In a modern civil law context, damages:

A sum of money claimed or awarded in compensation for a loss or an injury:

He or she sues not only for personal injury but for damages for the loss or destruction of the motor vehicle.

Also sometimes compensation:

Something, typically money, awarded to someone in recognition of loss, suffering, or injury:

he is seeking compensation for injuries suffered at work

Or restitution:

Recompense for injury or loss:

Since such legislation is not compatible, in my view, with Community law, they should, in principle, be entitled to seek restitution for those payments.

Occasionally recompense, sometimes as a noun but more often as a verb:

Make amends to (someone) for loss or harm suffered; compensate:

offenders should recompense their victims

There's also 'making amends' - that's usually used to mean non-financial compensation, although money could be involved.

In the context of war, reparations:

The compensation for war damage paid by a defeated state:

the Treaty of Versailles imposed heavy reparations and restrictions on Germany

Where state A has conquered state B in the past (or has shown that they are capable of doing so) and state B pays state A 'protection money' not to invade again, that money is called 'danegelt':

1911 C. R. L. Fletcher & R. Kipling School Hist. Eng. ii. 39

It is always a temptation to an armed and agile nation,
To call upon a neighbour and to say:—
‘We invaded you last night—
we are quite prepared to fight,
Unless you pay us cash to go away’.
And that is called asking for Dane-geld.

It's a pejorative term. Where a losing state is forced to pay money to a winning state, whether this is 'war reparations' or 'danegelt' might depend on your point of view, on whether you belive the amount is proportionate to the actual loses, on which state you believe was the aggressor, etc etc.

Ethelread the Unready. A Weak King

Rather than wait for him the Danes used to fine him large sums called Danegeld, for not being ready. But though they were always ready, the Danes had very bad memories and often used to forget that they had been paid the Danegeld and come back for it almost before they had sailed away. By that time Ethelread was always unready again.

(parody)

1066 and All That, Sellar & Yeatman, 1931.

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    Nice answer. I suggest you add restitution to your list. – Erik Kowal Nov 26 '14 at 12:07
  • @ErikKowal, good idea. done. – A E Nov 26 '14 at 12:55
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In the context of war the word is usually

reparation

It can also be used in contexts other than war ( http://www.merriam-webster.com/dictionary/reparation )

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Compensation - something, typically money, awarded to someone in recognition of loss, suffering, or injury.

[How can I reference Google define?]

Compensation is the term I'd use for your first definition, but I'm not sure it fits the second.

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The best choices are "reparations" and "compensation", which have already been mentioned in other answers.

"reparations" is the best choice for money paid by a country that loses a war because of destruction, damage, deaths, etc.

reparations (noun) - compensation or remuneration required from a defeated nation as indemnity for damage or injury during a war. The Free Dictionary

"The treaty of Versailles forced Germany to pay reparations to certain countries that had formed the Allied Powers."

When the word refers to money paid by a person who inflicts harm, damage or loss to another person, compensation fits better.

compensation - "money, given or received as payment or reparation, as for a service or loss" The Free Dictionary

"The victim received $10,000 in compensation."

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