HOME Home
Contracts IconPES Contract Toolkit

Contents

Authors & Contributors

PES Contract Clauses > Failure to Make or Accept Delivery Example 1

  1. Failure to Make or Accept Delivery. A failure to make or accept delivery of VERs is not an Event of Default, as that term is defined in clause 9.1, and does not cause or permit termination of this agreement. A party that owes damages under clause 8.1 or 8.2 shall pay those damages no later than 10 Banking Days after the date on which that party receives notice of delivery failure.
    1. Failure to Make Delivery. If the Seller Representative fails to make delivery of VERs as provided in clause 2.1, the Seller Representative shall pay the Buyer the positive difference, if any (the "Buyer's Replacement Cost"), between (1) the price the Buyer, acting in a commercially reasonable manner, does or would pay in an arm's length transaction for an equivalent quantity of equivalent VERs to replace the VERs that were not delivered (the "Default Quantity"), and (2) the Contract Price multiplied by the Default Quantity, plus
      1. interest on the Buyer's Replacement Cost at an annual rate equal to LIBOR plus 3% compounded monthly from and including the Delivery Date to but excluding the date payment is made, plus
      2. the amount of reasonable costs and expenses that the Buyer incurs in respect of the Default Quantity (including, without limitation, broker fees, commissions and legal fees).
    2. Failure to Accept Delivery. If the Buyer fails to accept delivery of VERs as provided in clause 2.1, the Buyer shall pay the Seller Representative for the positive difference, if any (the "Seller Representative's Replacement Cost"), between (1) the Contract Price multiplied by the Default Quantity and (2) the price the Seller Representative, acting in a commercially reasonable manner, does or would receive in an arm's length transaction for the Default Quantity, plus
      1. interest on the Seller Representative's Replacement Cost at an annual rate equal to LIBOR plus 3% compounded monthly from and including the Delivery Date to but excluding the date payment is made, plus
      2. the amount of reasonable costs and expenses that the Seller Representative incurs in respect of the Default Quantity (including, without limitation, broker fees, commissions and legal fees, but not including the amount, if any, payable in respect of excess emissions penalties.

Context of this Clause:

  • Forward purchase agreement
  • Ecosystem service: forest carbon emission reductions
  • Numerous sellers (Participating Landholders) are represented by an individual (the Seller Representative)

About: Failure to Make or Accept Delivery

Disclaimer: Materials on this site are meant to highlight issues that should be considered in PES transactions, not to provide a substitute for experienced legal counsel. It will be essential to engage legal counsel in conjunction with any PES transaction to ensure that any agreements reflect the latest developments in the field and comply with current local and national legislation.



This website is made possible by the generous support of the American people through the United States Agency for International Development (USAID), under the terms of the TransLinks Cooperative Agreement No.EPP-A-00-06-00014-00 to The Wildlife Conservation Society (WCS). TransLinks is a partnership of WCS, The Earth Institute, Enterprise Works/VITA, Forest Trends and The Land Tenure Center. The contents are the responsibility of the authors and do not necessarily reflect the views of USAID or the United States Government.