14.1 The Authority acknowledges that the DFE benefits from the Flooding Rights which it may exercise in respect of the Academy in accordance with the Articles of Association and the Funding Agreement.
14.2 The DFE shall promptly notify the Authority upon exercising any of its Flooding Rights, providing details as may reasonably be required by the Authority. The DFE shall notify the Authority when the exercise of any Flooding Rights ceases.
14.3 In the event that the Academy is in material breach of the [Development and] Schools Agreement with the consequence that such breach has placed the Authority in breach of the Project Documents, the Authority may request that the DFE:
14.3.1 exercise its Flooding Rights; and/or
14.3.2 take any other reasonable action to the extent that the DFE is permitted to do so (such action to be agreed between the DFE and the Authority, both parties acting reasonably); and/or
14.3.3 compensate the Authority for Direct Losses which the Authority has incurred as a result of such breach.
14.4 Following a request made by the Authority under clause 14.3, the DFE shall consult with the Authority in relation to the course of action which DFE proposes to take. The DFE shall act reasonably when considering any request made by the Authority. The DFE shall retain discretion whether to take the action requested by the Authority or whether to take another course of action, provided always that the DFE acts reasonably when exercising its discretion.
14.5 In the event that the DFE decides to compensate the Authority pursuant to clause 14.3.3, the DFE shall have the right to specify such conditions in relation to such compensation as it sees fit.
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28 This clause refers to the DFE's rights to take action in respect of a failing or poorly performing School but before the point at which the School fails or goes into insolvency and where there would be a need to bring in a suitable substitute or for the School to revert to the Authority. This may, for example, be in circumstances where the Academy's actions are leading to regular claims by the Authority. The flooding rights are set out in the Articles whereby the DFE may appoint additional Governors to the governing board in order to control decision making.