Hell or High Water Clauses: Unconditional Obligations
What Is a Hell or High Water Clause?
A hell or high water clause creates an unconditional obligation that must be performed regardless of any circumstances that arise. The name captures the idea that the party must fulfill the obligation "come hell or high water" — no matter what happens.
These clauses eliminate virtually all excuses for non-performance, including events that might otherwise allow a party to suspend or terminate their obligations.
Where Hell or High Water Clauses Appear
Equipment leasing: The most common context. A lessee must make all lease payments for the full term regardless of whether the equipment breaks down, becomes obsolete, or is no longer needed. The lessor has no obligation to repair or replace.
M&A regulatory commitments: A buyer agrees to take whatever steps are necessary to obtain regulatory approval for the acquisition, including divesting assets or accepting conditions. This prevents the buyer from using a regulatory block as an excuse to walk away.
Take-or-pay contracts: In energy and commodity contracts, the buyer must pay for a minimum quantity whether or not they actually take delivery.
What These Clauses Mean for You
- No setoff rights — You cannot reduce payments because of disputes or claims against the other party
- No defenses — Equipment failure, market changes, or business downturns are not excuses
- No early termination — You typically cannot end the contract before the term expires
- Full payment obligation — Even bankruptcy may not eliminate the obligation
What to Watch For
- The scope of "unconditional" — whether any exceptions exist at all (fraud, illegality)
- Whether force majeure events are excluded or overridden by the hell or high water language
- Interaction with insurance requirements and risk allocation
When to Consult a Lawyer
Before signing any agreement with a hell or high water clause, consider consulting an attorney to fully understand the financial exposure you are taking on and whether any exceptions can be negotiated.
This article is for informational purposes only and does not constitute legal advice. Consult a licensed attorney for guidance specific to your situation.