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2007 EFET General Agreement
Version 2.1(a) (Power)
A Jolly Contrarian owner’s manual™
8.1 in a Nutshell™
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| 8.1 in all its glory
- § 8.1 Failure to Transfer:
- (a) Two Business Days Grace Period. When the Seller fails to Transfer to the Buyer the Contract Quantity, in whole or in part, on a Delivery Date as required in accordance with the terms of an Allowance Transaction, and such failure is not excused by an event of Force Majeure, Suspension Event or the Buyer’s non-performance, the Seller may remedy such failure by Scheduling and Transferring such Contract Quantity (or undelivered portion thereof) to the Buyer on the second Delivery Business Day following the Delivery Date, provided that such day is not on or after the Reconciliation Deadline following the relevant Delivery Date, and further subject to the additional obligation of the Seller to pay the Buyer, as compensation for its late Transfer, interest calculated: (i) as follows for the two Delivery Business Day grace period; and (ii) as set forth in the applicable subpart of this § 8.1 for any longer period the Seller fails to deliver the Allowances thereafter.
- Interest for the two Delivery Business Day grace period shall accrue at the Interest Rate specified in § 13.5 (Default Interest) for the period from (and including) the Delivery Date to (but excluding) the second Delivery Business Day following the Delivery Date on the Total Contract Price of the undelivered Allowances, such Total Contract Price calculated as follows: the number of undelivered Allowances multiplied by a fraction determined by dividing the Total Contract Price[1] by the Contract Quantity.
- (b) Buyer’s Cover Costs. In the event that the Seller fails to Transfer to the Buyer all or any portion of a Contract Quantity as required by § 8.1(a) (Two Business Days Grace Period) in accordance with the terms of an Allowance Transaction and the Buyer has not agreed to a Deferred Delivery Date as provided for in § 8.1(c) (Buyer’s Right to Waive Its Cover Costs), the Seller shall incur the obligation to pay the Buyer, as compensation for its failure to Transfer, an amount (hereinafter “Buyer’s Cover Costs”) equal to either:
- (i) if no EEP or EEP Equivalent is operative or applicable to the Allowance Transaction, the sum of:
- (A) the price, if any, in excess of the portion of the Total Contract Price applicable to the Allowances not Transferred to the Buyer by the Seller, which the Buyer, acting in a commercially reasonable manner either did, or would have been able to, pay to purchase or otherwise acquire in an arm’s length transaction from a third party or parties, a quantity of Allowances necessary to replace the Allowances not Transferred by the Seller;
- (B) such reasonable additional incidental costs as the Buyer incurred in attempting to make or making such replacement purchase of Allowances to the extent those costs and expenses are not recovered in § 8.1(b)(i)(A) above; and
- (C) interest accrued during the two Delivery Business Day grace period as provided in §8.1(a); plus interest, at the Interest Rate specified in § 13.5 (Default Interest), accrued from (and including) the Delivery Business Date following the Delivery Date, to (but excluding) the receipt by the Buyer of damages for the Seller’s failure to Transfer, such amount calculated using the following formula:
- Amount on which interest accrues = UA x [(RP – CP)]
- where:
- UA means undelivered Allowances, the total number of Allowances the Seller failed to deliver;
- RP means replacement price, the price the Buyer paid (or, if it could have procured replacement Allowances but did not do so, the first price which the Buyer would have been able to pay) for each replacement Allowance in the UA; and
- CP means the aggregate Contract Price that the Buyer would have been required to pay to the Seller for all undelivered Allowances comprising the UA had the Seller not defaulted on its delivery obligation; or
- (ii) if an EEP or EEP Equivalent has been made applicable to the Allowance Transaction and has arisen, and further subject to the fulfillment of all applicable requirements imposed in § 8.3 (EEP and EEP Equivalent), the amount calculated using the following formula:
- (A) the price at which the Buyer, using reasonable endeavours and in (an) arm’s length transaction(s), is or would be able to purchase, as soon as reasonably possible following the Reconciliation Deadline, replacement Allowances in the quantity of those not delivered to it by the Seller (such quantity reduced, if applicable, by the number of Allowances the Buyer was able to purchase prior to the Reconciliation Deadline as contemplated by § 8.1(b)(i), damages for the cost of which being recoverable pursuant to element (G) of this formula, herein below)(the net resulting number of Allowances corresponding to the, as applicable, EEP or EEP Equivalent, being referred to hereinafter as the “Undelivered EEP Amount” or “UEA”);
- (B) minus the price that the Buyer would have been required to pay the Seller for those Allowances comprising the UEA, had the Seller delivered those Allowances to the Buyer in accordance with the terms of the Allowance Transaction;
- (C) plus the amount of, as applicable, the EEP or EEP Equivalent on the UEA;
- (D) plus interest accrued during the two Delivery Business Day grace period, calculated as provided in § 8.1(a);
- (E) plus interest, at the Interest Rate specified in § 13.5 (Default Interest), accrued from (and including) the first date on which the Buyer would be able to purchase, following the Reconciliation Deadline, the UEA of next Compliance Year replacement Allowances, to (but excluding) the date of the Buyer’s receipt of damages for the Seller’s failure to Transfer, on the amount determined using the following formula:
- Amount on which interest accrues = UEA x (REP – CP)
- where:
- UEA has the meaning set forth above;
- REP means the Replacement EEP Price, which shall be the (per Allowance) price of next Compliance Year Allowances calculated pursuant to § 8.1(b)(ii)(A), above; and
- CP means the per Allowance Contract Price that the Buyer would have been required to pay to the Seller for each undelivered Allowances comprising the UEA had the Seller not defaulted on its delivery obligation;
- (F) plus such reasonable additional incidental costs as the Buyer incurred in, as applicable, both attempting unsuccessfully to make purchase of replacement Allowances in order to avoid the accrual of an EEP or EEP Equivalent, and in making replacement purchase(s) of next Compliance Year Allowances as described in § 8.1(b)(ii)(A), above; to the extent those costs and expenses are not recovered via § 8.1(b)(i)(A) above (which additional incidental damages, for the avoidance of doubt, may also include interest accrued at the Interest Rate specified in § 13.5 (Default Interest), from (and including) the date on which an EEP or EEP Equivalent is paid, to (but excluding) the receipt by the Buyer of damages for the Seller’s failure to Transfer); and
- (G) plus, if applicable, the Buyer’s Cover Costs incurred in replacing that portion of Allowances not Transferred to the Buyer by the Seller for which the Buyer did not incur an EEP or EEP Equivalent (and thus not comprising the UEA) (such portion of Allowances not Transferred being hereinafter referred to as the “Non-UEA”), calculated in accordance with the methodology set forth in § 8.1(b)(i), which methodology shall apply equally to this § 8(b)(ii)(G);
- (H) plus interest accrued on the value of the Non-UEA calculated in accordance with the methodology set forth in § 8.1(b)(i)(C), but in this context calculated on the amount of the Non-UEA, rather than the amount of the UA.
- provided, always, that in the event that the number calculated through application of elements (A) through (H) of the formula set forth immediately above in this § 8.1(b)(ii) results in a negative number, such number shall be deemed to be zero and no damages will be owed in respect of such elements of this damages formula.
- (c) Buyer’s Right to Waive Its Cover Costs. The Buyer shall be entitled to invoice the Seller for damages payable pursuant to § 8.1(b)(i) (Buyer’s Cover Costs) in accordance with the requirements of Payment Cycle B as defined in § 13.2 (Payment). However, the Buyer may alternatively, but shall be under no obligation to, defer the due date on the payment of such damages for a reasonable period of time (but in no event beyond the applicable Reconciliation Deadline) if the Seller has indicated to the Buyer an intent to attempt to cure its Transfer default within a period of time acceptable to the Buyer.
- (i) At any time prior to the due date applicable to the payment of damages due to the Buyer under §8.1(b), the Seller may offer to Transfer to the Buyer replacement Allowances on a new Delivery Date (the “Deferred Delivery Date”) for those it originally failed to Transfer. The Buyer may, but is not required to, agree to accept such Transfer of replacement Allowances in lieu of the damages it is entitled to recover under § 8.1(b), provided that in such case the Buyer shall be entitled to invoice the Seller for interest for the intervening period calculated as the sum of interest accrued during the two Delivery Business Day grace period as provided in § 8.1(a); plus interest, at the Interest Rate specified in § 13.5 (Default Interest), from (and including) the first Delivery Business Day following the Delivery Date, to (but excluding) the date of actual Transfer of the previously undelivered Allowance(s), accrued on the amount calculated in accordance with the formula set forth in § 8.1(b)(i)(C).
- (ii) If the Buyer agrees to accept the Seller’s offer for Transfer of replacement Allowances on a Deferred Delivery Date as provided above in subparagraph (i), but the Seller again defaults on its deferred Transfer obligation, the Buyer shall be entitled to invoice the Seller for an amount calculated in accordance with § 8.1(b) (Buyer’s Cover Costs) save that the amount it may so invoice the Seller shall account for both:
- (A) interest, (1) in the event that the Buyer is subsequently able to make a replacement purchase of Allowances, calculated as provided in § 8.1(b)(i)(C); or (2) in the event the Buyer is unable to make a replacement purchase of Allowances before the Reconciliation Deadline for the relevant Compliance Period, calculated as provided in §8.1(b)(ii)(D); and
- (B) any increase in the Buyer’s Cover Costs reflecting higher market prices pertaining to replacement Allowances on the Deferred Delivery Date when compared to those available in the market on the original Delivery Date.
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