Protected Debts Clause Samples
The 'Protected Debts' clause defines certain debts or financial obligations that are safeguarded from specific actions, such as set-off, reduction, or discharge under the agreement. Typically, this clause outlines which debts remain enforceable and cannot be affected by insolvency proceedings, counterclaims, or other contractual provisions. Its core practical function is to ensure that designated debts retain their priority and enforceability, thereby protecting the interests of the party to whom the debt is owed and reducing the risk of loss due to unforeseen legal or financial complications.
Protected Debts. If a Customer tries to pay a Protected Debt by a method (including a cheque) requiring presentation for payment and payment is refused on first presentation that Customer’s Covered Limit will automatically become as it was when We received the Debt Schedule on which that Protected Debt was included. If such attempted payment covered more than one Protected Debt the Covered Limit will automatically reduce to the lowest limit for that Customer when We received any Debt Schedule on which any such Protected Debt was included.