Termination of delivery obligations upon Event of Default Clause Samples
The 'Termination of delivery obligations upon Event of Default' clause allows a party to cease its obligation to deliver goods, services, or payments if the other party defaults on the contract. In practice, this means that if one party fails to meet its contractual commitments—such as missing payments or breaching key terms—the non-defaulting party is no longer required to continue fulfilling its own delivery or performance obligations. This clause serves to protect parties from ongoing exposure or losses when the counterparty is in default, providing a clear mechanism for suspending or ending contractual duties in response to significant breaches.
Termination of delivery obligations upon Event of Default. Subject to paragraph 9, if an Event of Default occurs in relation to either Party, the Parties’ delivery and payment obligations (and any other obligations they have under this Agreement) shall be accelerated so as to require performance thereof at the time such Event of Default occurs (the date of which shall be the “Termination Date” for the purposes of this clause) so that performance of such delivery and payment obligations shall be effected only in accordance with the following provisions:
(i) the Relevant Value of the securities which would have been required to be delivered but for such termination (or payment to be made, as the case may be) by each Party shall be established in accordance with paragraph 10.3; and
(ii) on the basis of the Relevant Values so established, an account shall be taken (as at the Termination Date) of what is due from each Party to the other and (on the basis that each Party’s claim against the other in respect of delivery of Equivalent Securities or Equivalent Collateral or any cash payment equals the Relevant Value thereof) the sums due from one Party shall be set-off against the sums due from the other and only the balance of the account shall be payable (by the Party having the claim valued at the lower amount pursuant to the foregoing) and such balance shall be payable on the Termination Date. If the Bid Value is greater than the Offer Value, and the Non-Defaulting Party had delivered to the Defaulting Party a Letter of Credit, the Defaulting Party shall draw on the Letter of Credit to the extent of the balance due and shall subsequently redeliver for cancellation the Letter of Credit so provided. If the Offer Value is greater than the Bid Value, and the Defaulting Party had delivered to the Non-Defaulting Party a Letter of Credit, the Non-Defaulting Party shall draw on the Letter of Credit to the extent of the balance due and shall subsequently redeliver for cancellation the Letter of Credit so provided. In all other circumstances, where a Letter of Credit has been provided to a Party, such Party shall redeliver for cancellation the Letter of Credit so provided.