Risk Compensation Clause Samples
The Risk Compensation clause defines how parties will address and allocate financial responsibility for potential risks arising under the agreement. Typically, this clause outlines which party is liable for specific types of losses, damages, or unforeseen events, and may specify compensation mechanisms such as indemnification or insurance requirements. Its core practical function is to ensure that both parties understand and agree on who bears the cost of certain risks, thereby reducing disputes and providing clarity in the event of adverse circumstances.
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Risk Compensation. In order to compensate each of the Participants whose name appears in the list of Participants in Exhibit 1 at the time this Agreement is originally executed (the "Original Participants") for the substantial risk it incurred in funding the planning, engineering and construction of the Transmission Project, an Additional Participant shall pay IID additional sum equal to fifteen percent (15%) of the amount paid by it pursuant to Section 8.02 (without regard to any amount refunded to the Additional Participant pursuant to Section 8.03). IID shall distribute such amount among the Original Participants as follows:
(i) A(i) = A(t) x ----- PC(t) where A(i) is the amount to be distributed to each Original Participant, A(t) is the total amount to be distributed to all Original Participants pursuant to this Section 8.04, PC(i) is the total of the Project Contributions made by the Original Participant receiving the distribution as of the date of such distribution, and PC(t) is the total of the Project Contributions made by all Original Participants as of such date.
Risk Compensation. When the Network has 1,000 or more Members assigned to Network's Providers, Network agrees to take on full-risk for all Covered Services provided to the Members and to be compensated as follows: