Rescindable Payments Sample Clauses
The RESCINDABLE PAYMENTS clause defines the conditions under which payments made under a contract can be reversed or reclaimed by the paying party. Typically, this clause applies to situations where a payment was made in error, due to fraud, or because of a breach of contract by the recipient. For example, if a party receives funds they were not entitled to, the clause allows the payer to demand repayment or offset the amount against future obligations. Its core practical function is to protect parties from financial loss due to mistaken or improper payments, ensuring that only legitimate payments are retained.
Rescindable Payments. (a) Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders or any other Finance Parties that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance with this Agreement and may (but shall not be required to) in reliance upon such assumption, distribute to the applicable Lenders or other Finance Parties, as the case may be, the amount due.
(b) With respect to any payment that the Administrative Agent makes to any Lender or other Finance Party as to which the Administrative Agent determines (in its sole and absolute discretion) that any of the following applies (such payment referred to as the “Rescindable Amount”):
(i) the Borrower has not in fact made the corresponding payment to the Administrative Agent;
(ii) the Administrative Agent has made a payment in excess of the amount(s) received by it from the Borrower either individually or in the aggregate (whether or not then owed); or
(iii) the Administrative Agent has for any reason otherwise erroneously made such payment; then each of the Finance Parties severally agrees to repay to the Administrative Agent forthwith on demand the Rescindable Amount so distributed to such Finance Party, in immediately available funds with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.