2.26.4  Sole remedy for late Acceptance (clause 26.3)

As discussed in section 2.5.1, where Project Co fails to achieve Commercial Acceptance by the Date for Commercial Acceptance, subject to some limited exceptions, the State's sole financial remedy is limited to the amount of the Service Payment not required to be paid by the State in those circumstances. The principle set out in clause 26.3 does not limit the State's rights in relation to a Major Default or Default Termination Event, the event giving rise to the delay or the consequence of such event (other than the delay itself). This provision should be further considered if a procuring agency considers that the savings the State realises as a result of the truncation of the Operational Phase and consequent reduction in the number of Service Payments payable is insufficient to cover the loss to the State of late Commercial Acceptance. In those circumstances a liquidated damages regime or an indemnity for losses due to late Commercial Acceptance may be appropriate. If either of those options are considered then Project Co's liability should typically be capped.