(c) In calculating the seller`s loss and asserting the corresponding claim, the seller has taken into account more favourable terms that the seller itself enjoys or makes available to other buyers. For Company A, the agreement is only profitable if the price difference it receives from Company C is greater than the amount of the fine it would pay to Company B. Given the magnitude of the burden that such clauses can entail, it is hardly surprising that ingenious (or desperate) counterparties put forward new legal arguments to undermine the critical obligations of otc or payable contracts. A take or pay contract is an agreement that helps protect the seller if the buyer refuses to buy or take back 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 accept the items. Many call this the « killing clause. » In that sense, in order to require any buyer to bear the costs incurred by the activation of his own take-or-pay clause vis-à-vis his supplier, the seller must have exhausted his own delivery conditions and have removed the quantities of make-up due to him, providing for a detailed breakdown of the actual activation costs of that clause. If the seller`s costs were in fact zero or lower than what actually corresponds to each buyer, the seller`s claim would have to be reduced to that amount. Alternatively, if world gas prices fall during the contract, Company A could refuse delivery of the gas and purchase gas from another supplier, Company C, at the new, lower price and pay the agreed fine to Company B. It is in company A`s interest to do so when the total cost of Company C`s gas, plus the penalty, is less than the price initially negotiated for the take-back of Company B`s gas. However, they can also continue the contract by renegotiating the terms when external events cause disruption. Compliance with the agreement may benefit both parties if both parties are reasonable and cooperative at the time of renegotiation. In view of the compensatory nature of private or payment clauses, the general principles of damages and, in particular, limitations on the extent of the damage apply, such as the obligation to take into account the damage suffered by the victim (in this case the demanding seller) and the profit resulting from the injurious event.
Since the objective of compensation is to compensate the victim for his losses and not to justify his enrichment, any profit made by a person claiming the losses resulting from an injurious event should be taken into account and reduce the alleged amount, so that the responsible party is required to pay only for the actual damage, that the victim has suffered. This is imposed by the very notion of injury, according to the theory of difference according to which the loss is the difference between the actual economic situation of the victim and his economic situation if the injurious event had not occurred. Such contracts are also useful for the buyer, since there is no obligation to receive the delivery. Suppose that company A finds in the case below 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….