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Commercial Law

‘Trial of the Century’ Takes on Hell or High Water

Will a Rising Tide of Managed Solutions Transactions Sink the Most Venerated of Leasing Provisions?

There is change afoot in the equipment leasing marketplace, and it portends a potentially seismic shift in the perception, usefulness and utility of the well-tested HOHW clause.

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Among equipment leasing lawyers, there is perhaps no contractual provision more important, more universal, more indispensable — perhaps more sacrosanct — than the widely revered and utilized hell-or-high-water clause. Under this provision, which appears in one form or another in virtually every commercial equipment lease agreement signed over the past 40 years, the lessee agrees that the lease is non-cancelable, that the lessee’s obligations under the lease are irrevocable, that rental payments must continue to be made under any and all circumstances (including the loss or destruction of the leased equipment), and that all defenses, setoffs, and counterclaims to any action for enforcement of the lessee’s obligations are waived.

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