In addition, with respect to the enforceability of hell-or-high-water provisions by finance companies and lenders, the Tenth Circuit Court of Appeals has noted: The essential practical consideration requiring liability as a matter of law in these situations is that these clauses are essential to the equipment leasing industry. A true lease is a type of multi-year lease where the lessor bears both the risks and rewards of property ownership. The offers that appear in this table are from partnerships from which Investopedia receives compensation. The equipment may be shipped directly from the manufacturer or supplier to the lessee without the lessor ever coming into contact with it. in clause [*] above. Some suppliers of equipment insist on the clause to be able to supply uninterrupted. For example, if a lessee agrees to rent or lease a piece of equipment or machinery under hell or high water terms, they are responsible for those payments regardless if the equipment malfunctions. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb. This Standard Clause has integrated notes with important explanations and drafting tips. The expression seems to have its origins on the late 19th-century Midwest ranches where determined cowboys would drive their herds of cattle through high water and “hell.” Businesses may insist on having a hell or high water clause in their contracts for a number of reasons: Hell or high water clauses are usually part of construction and equipment leasing industry contracts. (See Uniform Commercial Code (UCC) Article 2A-407) Many cases have, in the past, enforced hell or high water clauses despite the attack of a lessee. The lessee in such an agreement usually selects the equipment they wish to procure. shall supplement [the] provisions [of the UCC]." Enforceability of 'Hell or High Water' Clauses in the COVID-19 Business Environment Troutman Pepper on 5/8/2020 The COVID-19 pandemic has resulted in dramatic shifts in the way many companies operate. Popular clauses apart from the hell or high water clause include the following: If you need help with the hell or high water clause in your contract, you can post your legal need on UpCounsel's marketplace. A hell or high water contract (also known as a promise-to-pay contract) is a non-cancelable contract whereby the purchaser must make the specified payments to the seller, regardless of … Article 2A of the code, in particular, gives special protection to the clause. Once the lessee accepts the aircraft at delivery, the lessee is often required to take on most of the operational and financial risk with the lessor’s obligations being limited to the bare minimum. Lernen Sie die Übersetzung für 'hell or high water clause' in LEOs Englisch ⇔ Deutsch Wörterbuch. The risk can be in terms of the capital committed or even the customization of a product in such a way that makes it unlikely that there is another purchaser on the market. A hell or high water clause in a contract is a provision that states that a purchaser must pay the stipulated payments at the agreed time regardless of any difficulties he may encounter. The clause is also popular with suppliers of equipment like computers and industrial equipment. A hell or high water clause is a clause in a contract, usually a lease, which provides that the payments must continue irrespective of any difficulties which the paying party may encounter (usually in relation to the operation of the leased asset). This Standard Clause provides that a lessee is required to make rental payments under all circumstances, including if the lessor breaches the equipment lease or if the equipment is damaged or unfit. If the finance company decides to exercise its rights under hell-or-high-water clauses or other contractual remedies, it should make sure that its paperwork is in order and includes the contract, promissory note or lease agreement; any mandated notices, including a notice of default; and an accurate accounting of amounts due. UpCounsel accepts only the top 5 percent of lawyers to its site. A hell or high water contract (also known as a promise-to-pay contract) is a non-cancelable contract whereby the purchaser must make the specified payments to the seller, regardless of any difficulties they may encounter. A hell or high water contract is a non-cancelable agreement by which the lessee is legally obliged until the expiration of the contract, to continue making stipulated installment payments to the lessor, irrespective of any complications they may run into during usage of the leased property or equipment. Equipment lessors may require the equipment lessee to continue making payments even if the equipment breaks down. The phrase “hell or high water” is usually not included in the contract because it has limited meaning legally. The term is derived from the expression “come hell or high water”, which means the action or obligation must be performed regardless of any difficulties. The buyer must make the payment irrespective of any difficulties. Topics similar to or like Hell or high water clause Clause in a contract, usually a lease, which provides that the payments must continue irrespective of any difficulties which the paying party may encounter. Hire the top business lawyers and save up to 60% on legal fees. europarl.europa.eu Contre vents et marées, voilà qu'un autre secteur clé de nos services d'intérêt public est sur le point d'être sacrifié sur l'autel du profit. In other words, the payment to the Lessor or Seller should continue as per the stipulated terms of the contract regardless of any issues or problems. A financing agreement with hell or high water language is designed to ensure that the lessee will pay the lessor under no uncertain terms. If there is an issue with the equipment the lessee receives, the lessor typically is not at fault because the lessee chose the equipment they wanted to rent. In response, the lessor (or any related financier) should look to the “hell or high water” clause typically included in aircraft operating leases. Lease payments are tied to the terms of different forms of leasing, with differences in lease types coming from how maintenance is treated. In a merger or purchase agreement, a hell or high water clause may be included when one of the parties to the agreement requires the other to take on all the antitrust risk arising from the transaction. Flaws in the equipment may be because of an issue with its manufacturing. The “hell or high water” provision in an equipment lease agreement is a provision that makes a lessee’s obligation to pay rent irrevocable and independent upon the acceptance of the leased equipment. 1. A termination date is the day on which a financial contract ends, a final payment is made and no further exchanges will occur. When a Contract Cannot Be Enforced Even If It Has a Hell or High Water Clause, 4. The viability of the acquisition agreement could be tied directly to the buyer's ability to resolve such matters and clear the way for the deal to proceed. Courts have historically ruled that the clause is valid in different lawsuits. Hell or high water contracts can be enforced even in instances where there is some fault or defect in the property at the center of the agreement. The clause usually forms part of a parent company guarantee. The payments will enable the supplier to stay afloat despite difficulties like equipment breakdown. What Courts Think of the Hell or High Water Clauses, 3. Hell or High Water Clause Hell or High Water Clause; Hell or High Water Clause Definition. A lessor is a person or other entity that owns an asset but which is leased under an agreement to the lessee. Hell or high water clauses bind the purchaser or lessee to the terms of the contract until the contract's expiration. The phrase "come hell or high water" typically means "do whatever needs to be done, no matter the circumstances". Come hell or high water, another key area of our services of public interest is to be sacrificed to the profit motive. A hell or high water clause in a contract is a provision that states that a purchaser must pay the stipulated payments at the agreed time regardless of any difficulties he may encounter. Hell or High Water. Does this sound impossible? Hell-or-High-Water Lease. The obligations and liabilities of each … The clause is normally intended to reduce the possibility of the purchaser breaching the contract with the excuse that the contract became impossible to fulfill. It also refers to the "hell or high water clause" in a contract, usually a lease, which states that the payments must continue regardless of any difficulties the paying party may encounter. The term comes from the expression "come hell or high water," which means an action or obligation must be … Any warranties regarding the functionality of the equipment might fall to the supplier or manufacturer to fulfill. The lessee sought to circumvent the “hell or high water” clause by alleging fraudulent inducement. Was this document helpful? Bar a few exceptions, U.S. courts in most states enforce the hell or high water clause in contracts. The vendor or lessor might only handle the financing aspect of the transaction and otherwise hold a passive role regarding the equipment itself. There are a number of clauses that can be used in a contract to try to limit the excuses that a party has for breaching the contract. The operation of the ‘hell or high water’ clause must be considered in tandem with the delivery of the aircraft on an ‘as is, where is’ basis. Hell or high water contracts can come into play with project finance transactions, acquisition deals and high-yield indentures. Id. Most importantly, §§2A-407 and 508 create a statutory “hell or high water” clause by making the lessee’s obligations (including payment obligations) irrevocable and independent of the lessor’s or supplier’ s obligations. A thorough "hell or high water" clause that identifies the risks inherent in leasing an aircraft that are to be borne by the Lessee will help prevent a claim for frustration of contract. THIS AGREEMENT SHALL BE A NET LEASE, AND EACH LESSEE’S OBLIGATION TO PAY ALL RENT AND OTHER SUMS HEREUNDER SHALL BE ABSOLUTE AND UNCONDITIONAL, AND SHALL NOT BE SUBJECT TO ANY ABATEMENT, SETOFF, COUNTERCLAIM, DEDUCTION OR REDUCTION FOR ANY REASON WHATSOEVER. . Hell or high water clauses are protected by the Uniform Commercial Code (UCC). The legal basis for such claims stems from Section 1-103 of the UCC which states that "the principles of law and equity, including . UCC §1-103. The lessee sought to circumvent the hell or high water clause by alleging fraudulent inducement. The “Hell or High Water” clause means the purchaser (your company) can be required to pay hundreds or thousands of dollars a month for several years, for equipment that never functioned, or stuck with unusable, non-functioning equipment in the case of flood, fire or other physical damage to the equipment. Want High Quality, Transparent, and Affordable Legal Services? If the supplier took on a loan to finance his operations, the supplier will need assurance that he will get payments to pay the loan. Mit Flexionstabellen der verschiedenen Fälle und Zeiten Aussprache und … Each party, acting solely through outside counsel, will (x) promptly notify the other party of any written communication to that party from any Governmental Entity located in the U.S. and, to the extent practicable, outside of the U.S. and, subject to For example, many leases pointedly mandate monthly payment of rent regardless of a force majeure – the so-called “hell or high water” clause. Such clauses describe an independent and absolute contractual obligation of a party to perform under an agreement without any contractual defense, including force majeure. Hell or high water contracts require payment whether or not the good or service is working as planned. Hell or high water clause is a provision in a contract directing the buyer to continue making the payment to the seller. Equipment Lease: Hell or High Water Clause. A frustration of purpose argument by an airline is almost certain not to survive the wrath of the typical – and aptly named - “hell or high water” payment clause. An adhesion contract refers to an agreement where one party has substantially more power than the other in creating the contract terms and conditions. Share it with your network! A buyer’s commitment to do whatever is necessary to obtain antitrust clearance, commonly known as a “Hell-or-High-Water” provision, featured prominently in a recent merger case decided by Delaware’s Court of Chancery. Because a hell or high water contract clause may have serious ramifications for the parties to a contract, it is wise to involve an experienced lawyer when drafting an agreement that contains the clause. Why You May Need a Hell or High Water Clause, 2. Other Contract Clauses Similar to the Hell or High Water Clause, Boilerplate Clauses In Commercial Contracts. Understanding Hell or High Water Contracts. A lessee is a person who rents land or property and must follow restrictions and guidelines set by a lease agreement. Hell or High Water Usually describes an independent and absolute contractual obligation of a party (known as a hell or high water clause or provision). No need to spend hours finding a lawyer, post a job and get custom quotes from experienced lawyers instantly. Some of the difficulties that may be encountered include equipment failure, damage, loss, and even death of the purchaser. The term "hell or high water clause" comes from the expression “come hell or high water,” which means that an action must be done regardless of what happens. at §3:1.10[A]. Simplistically, this clause is the absolute contractual obligation every lessor and lessor investor relies upon. The legal basis for such claims stems from §1-103 of the UCC, which states that “the principles of law and equity, including … principal and agent [and] fraud … shall … Back To: Real Estate, Personal, & Intellectual Property Hell or High Water Contract Definition. A hell or high water clause is a clause in a contract, usually a lease, which provides that the payments must continue irrespective of any difficulties which the paying party may encounter (usually in relation to the operation of the leased asset). “hell or high water” clause and an agreement that the lease was an Article 2A finance lease is enforced – notwithstanding that the lessor was a vendor of the equipment which had made a “Total Satisfaction Guarantee” in the two leases stating that the lessor would replace any equipment with which the lessee was not totally satisfied. A Standard Clause that may be used in a purchase or merger agreement when a seller or target company wishes the buyer to take on all of the antitrust risk in a transaction, known as a hell or high water (HOHW) provision, including making any divestitures required to close … Generally speaking, hell or high water contracts are used when the provider of a service or product is taking a large risk on behalf of the client. . For example, an acquisition deal with hell or high water language can direct the prospective buyer in the agreement to shoulder the burden of addressing any necessary divestitures or litigation that might result from antitrust regulatory issues. Precise wording is used to show that the purchaser will pay all sums unconditionally regardless of difficulties. In this case, the payments may help with repairs or financing. notes finance lease, hell or high water clause, and third party beneficiary theory in article 2a of the uniform commercial code introduction The clause usually forms … The suit goes on to say that JEA repeatedly acknowledged its obligations under the "hell-or-high-water" clause, that MEAG Power would not have agreed to take on such a … Hell or High Water Clause. A contract provision that requires payment regardless of any events that might occur, such as the destruction of … The hell or high water clause is the foundation stone of aircraft operating lease agreements and it, or its equivalent, form part of every lease we review at IBA. A Standard Clause that may be used in a purchase or merger agreement when a seller or target company wishes the buyer to take on all of the antitrust risk in a transaction, known as a hell or high water (HOHW) provision, including making any divestitures required to close the transaction and litigating any antitrust challenges. The lessor then buys the chosen item that is in turn leased to the customer. This Standard Clause has integrated notes with important explanations and … principal and agent [and] fraud…. Some of the difficulties that may be encountered include equipment failure, damage, loss, … A hell or high water clause in a contract is a provision that states that a purchaser must pay the stipulated payments at the time regardless of any encounter.3 min read.