IACCM Contract Management Forum

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2018-09-05 11:44:15

Sole Remedy for Performance & Default


If a contract has a sole remedy clause for performance (penalties applied in the event of late delivery up to a cap of 10%) are you also able have a termination right for cause which notes that if that cap is hit or delivery is not in accordance with the delivery schedule they are able to encash any performance guarantee? Also it notes that the provisions of that clause is in addition to any other rights the contractor has?

I would be grateful for anyones thoughts?

Many thanks
 •  Inaccord AG  •   2018-12-03 17:35:57
Dear Anonymous
I have seen a similar construction many times in my work for SMEs who supply to large telecommunications groups. The liquidated damages are a sole remedy for the supplier's delay UNTIL the cap is reached, after which the purchaser has the right to terminate the contract and/or encash the performance bond. A termination right for cause being that "delivery is not in accordance with the delivery schedule" seems to conflict with the liquidated damages provision, however. I'm assuming from your question that you are on the supply side and the contract template was provided by the purchaser? Did you query the purchaser about this conflict, and if so what was the outcome?

I think that you meant that the provisions of that clause are in addition to any other rights that the purchaser has.
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