Functional interdependence Clause Samples
The functional interdependence clause establishes that the obligations or performance of one party under a contract are directly linked to the obligations or performance of the other party. In practice, this means that if one party fails to fulfill its duties, the other party may be excused from performing its corresponding obligations, or may have the right to suspend performance until the issue is resolved. This clause is essential for ensuring that both parties remain mutually accountable and that neither is unfairly required to perform if the other does not, thereby promoting fairness and balance in contractual relationships.
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Functional interdependence. Com- ponents of real property produced by, or for, the taxpayer, for use by the tax- payer or a related person are function- ally interdependent if the placing in service of one component is dependent on the placing in service of the other component by the taxpayer or a related person. In the case of property pro- duced for sale, components of real property are functionally inter- dependent if they are customarily sold as a single unit. For example, the real property components of a single-family house (e.g., the land, foundation, and walls) are functionally interdependent. In contrast, components of real prop- erty that are expected to be separately placed in service or held for resale are not functionally interdependent. Thus, dwelling units within a multi-unit building that are separately placed in service or sold (within the meaning of § 1.263A–12(d)(1)) are treated as func- tionally independent of any other units, even though the units are lo- cated in the same building.