The nature of the take or payment clauses is the balance. In principle, these are pre-agreed indemnification clauses in which the buyer is in mora creditoris, which otherwise, according to the general provisions of Articles 349 et seq. of the Greek Civil Code, in particular in conjunction with Article 381 of the Greek Civil Code, would entail compensation to the seller under certain conditions, but not the payment of the financial consideration agreed in advance by the buyer. Would. Company A agrees to purchase 100 million cubic feet of natural gas from Company B. If Company A only needs 80 million cubic feet at the time of delivery, it will have to pay a fine. The fine is based on the conditions agreed in advance. Heavier are not only the conditions in terms of the price of the quantity to be taken or paid, but also those in terms of the type of delivery and the cost of the amount of makeup. In the latter case, the corresponding total cost to the customer must not exceed that of the seller.
The take-or-pay clause of the contract between the seller and his supplier could not be more favourable in terms of key elements compared to the clause agreed between the seller and the buyer in the contract. The meaning of `more expensive terms` is not limited to the wording of those terms, but also extends to how they are ultimately implemented and the economic results resulting from their implementation. This review should take place where appropriate. For the buyer, such contracts are also useful, since there is no obligation to accept delivery. In the above case, suppose company A finds another buyer who offers a lower price than company B. In this case, Company A will use the take-or-pay contract to terminate the contract and pay the fine. Profit compensation includes any profit made by the seller from arbitration during the performance of the contract and the parallel contract with its supplier, i.e. speculative purchase and sale according to the criterion of the price difference between pipeline gas and liquefied natural gas (LNG). In the course of performance of the contract, the seller may have purchased amounts lower than its own obligation to the supplier to purchase LNG at lower prices.
If proven, the benefits of this practice should be deducted from the amounts claimed by its customers for the seller`s loss resulting from the activation of take-or-pay clauses. Contracts to be taken or paid for are common in the energy industry and in particular in gas sales. (d) According to the above calculation, the seller has adjusted the price of the quantities to be taken or paid according to the price ultimately paid to its supplier. 4.1.1. Relationship between the terms of the contract between the seller and the buyer (customer) and the contract between the seller and his supplier. The prohibition of imposing more onerous clauses in the contract compared to the contract between seller-supplier [11] A take-or-pay contract is a rule that structures negotiations between companies and their suppliers. In this type of contract, the company takes the product from the supplier or pays him a penalty. For each product the Company takes, they agree to pay the supplier a certain price, e.B.50 US dollars per tonne. In addition, up to an agreed upper limit, the company must also pay the supplier for the products he does not accept. This “penalty price” is lower, say $40 a tonne. Since take or pay contracts generally apply to long-term contracts, they are vulnerable to future events that the agreement does not cover.
These events can be political, geological, commercial or more. It may happen that the contract is no longer feasible for one or both parties after the event. Thus, the buyer or seller can terminate the contract. Given the compensatory nature of the assumption of responsibility clauses, the general principles of damages are applicable, in particular limitations on the extent of the damage, such as the obligation to take into account the damage suffered by the injured party (in this case, the plaintiff seller) and the benefit derived from the harmful event. investinganswers.com/dictionary/t/take-or-pay Although take-or-pay is not the only way to manage delivery obligations in long-term contracts for the sale of goods, it remains the most common form. However, although the take-or-pay clause is common in practice, it is still often poorly worded. Parties entering into contracts for the unconditional assumption of obligations related to energy raw materials should be aware of the essential characteristics and limitations of the fundamental obligation to cease unconditionally and to ensure that they manage the significant differences between an unconditional or unconditional obligation to pay and an unconditional obligation to pay or a formal notice obligation. Since the purpose of compensation is to compensate the injured party for its losses and not to enrich it, any profit made by a person claiming losses resulting from a prejudicial event should be taken into account and the amount claimed should be reduced, so that the liable party is required to pay only for the actual loss, suffered by the injured party. This is imposed by the notion of loss in the context of the theory of difference itself, according to which loss is the difference between the actual economic situation of the injured party and its economic situation if the injurious event had not occurred. The advantages of the “take or pay” contract are as follows: the provision of Article 24 is a mandatory law in view of the objective it aims to achieve. Gas sales contracts should adopt the legal requirements to define the obligations arising from the clauses to be invoked and to establish specific conditions for the claim of claims under that clause. In any event, such agreements and claims shall not result in a violation of the parameters set out in Article 24.
It is equally important to examine the compatibility of those clauses, where they are included in long-term gas supply contracts, with Articles 101 and 102 TFEU. In particular, the inclusion of that clause in supply contracts should not lead to distortion of competition by creating or strengthening a dominant position of certain suppliers or by unduly binding the commercial freedom of their counterparties. The European Commission has recognised that these clauses are not prohibited per se; however, their impact on the European market should be assessed on a case-by-case basis, taking into account, in particular, criteria such as the location of the supplier on the relevant market and the general structure of the relevant market, the existence of other suppliers and the duration of the contract[10]. However, in the light of Union law, the legal assessment of remuneration obligations should examine whether they are compatible with the rules laid down in both the sectoral regulatory framework and competition law. Large-scale, HIGH-return projects that take long periods of time use long-term contracts to reassure the lender that payments are made on a predictable and reliable basis. A long-term contract is usually a contract with a duration of 20 to 30 years. A take-or-pay contract is a written agreement between a buyer and a seller that requires the buyer to pay even if the seller does not provide the item.4 min read A take-or-pay contract is an agreement that helps protect the seller in case the buyer refuses to buy or accept the items. This is a written agreement between the buyer and the seller. The goal is to protect the seller if the buyer refuses to deliver the items. Many also call this the “killing clause.” Taking or payment is a provision included in a contract in which a party is required either to accept delivery of goods or to pay a certain amount. Take or pay provisions benefit both the buyer and the seller by sharing the risk, and can benefit society by facilitating transactions and reducing transaction costs.
However, at least in the oil and gas context, courts tend to interpret “take or pay” contracts as an alternative means of enforcement; A gas buyer can either buy the gas or pay a shortfall. In other words, the courts conclude that as long as the buyer buys the gas or makes the payment of the default, there is no violation and therefore there is no lump sum compensation, since the payment of the amount of the deficit is not a remedy, but another means of performance. . . .