Energy Contracts
Contract University
Energy Contracts
Energy contracts — including power purchase agreements, supply contracts, and project development agreements — involve complex risk allocation across long time horizons. The provisions below are among the most consequential in energy transactions and are worth understanding before entering any energy-related agreement.
Definitions in This Topic
Force MajeureExcuses a party's non-performance — including failure to deliver or accept energy — when extraordinary events such as grid failures, natural disasters, or regulatory actions make performance impossible.View →Limitation of LiabilityCaps the maximum financial exposure either party faces under the contract — particularly important in energy agreements where supply disruptions can cause large downstream losses.View →IndemnificationShifts responsibility for specified losses — including environmental liability and third-party injury claims — from one contracting party to another.View →Change of ControlAddresses what happens to the energy contract if a party is acquired or undergoes a significant ownership change — a common concern in utility and energy sector M&A.View →AssignmentControls whether a party can transfer its rights or obligations under the energy contract to a successor entity or project company.View →Commercially Reasonable EffortsRequires a party to take the steps a reasonable business in similar circumstances would take — commonly used in energy contracts to define delivery and development obligations.View →Best EffortsRequires a party to try as hard as it possibly can to achieve a result — a higher standard than commercially reasonable efforts, sometimes used for permitting and regulatory approval obligations.View →Material BreachA significant failure to perform — such as failure to deliver contracted energy volumes — that goes to the heart of the agreement and triggers termination rights.View →Termination for ConvenienceAllows a party to end the energy contract without cause, typically with advance notice and payment of any applicable termination fees.View →
Contract University is expanding its dedicated coverage of energy-specific terms — including power purchase agreement provisions, curtailment clauses, and regulatory compliance obligations. More definitions are on the way.
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