Overage and Underage Clause Samples
The Overage and Underage clause defines how differences between the agreed-upon quantity or value and the actual delivered amount are handled in a contract. Typically, this clause sets acceptable thresholds for minor deviations, such as allowing a supplier to deliver slightly more or less than the specified quantity without penalty. For example, a contract for 1,000 units might permit a 5% overage or underage, meaning delivery of between 950 and 1,050 units is acceptable. The core function of this clause is to provide flexibility in fulfillment, reducing disputes over minor discrepancies and streamlining the administration of contracts where exact quantities are difficult to achieve.
Overage and Underage. The intent of this subsection is to require an annual accounting so that amounts paid by the City, which were based upon estimated or declared rates, may be adjusted so that the City pays no more or less than actual costs for maintenance and operation as such costs are subsequently determined. Should the rate or rate estimate declared in this section prove insufficient or in excess of actual costs for maintenance and operation, then, in the case of an insufficiency, the City shall pay a supplementary bill in the appropriate amount, or, in the case of an excess, the County shall provide the City a credit in the appropriate amount. The foregoing adjustment shall occur on or before December 31, 2023, and, thereafter, on or before December 31 of each year during the term of this Agreement. This subsection applies only to the usage of facilities that are within the flow limits established in Section 4 of this document.