Shakes Clause Samples

The "Shakes" clause defines the procedures and consequences that apply if a party to the agreement experiences significant financial instability, such as insolvency or bankruptcy. Typically, this clause outlines the steps the other party may take, such as suspending performance, demanding assurances, or terminating the contract if such financial distress occurs. Its core function is to protect parties from the risks associated with a counterparty's financial failure, ensuring that they have clear remedies and can minimize potential losses.