How To Offset The Risk Of Gov't Nonpayment

Law360, New York (February 5, 2013, 11:12 AM EST) -- A company with a contract to sell electricity, lease equipment or provide energy savings to a government entity should think carefully about the financeability of the contract.

Many jurisdictions place restrictions on contracts with government entities that straddle two or more fiscal years. The government must reserve the right in the contract not to make payments if the money for payments is not appropriated by the state legislature, county council or other legislative body. The reservation of rights is called a “non-appropriation” clause.

Such a clause...
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