Common use of Failure of subsequent performance Clause in Contracts

Failure of subsequent performance. Should subsequent performance fail within a reasonable period, Customer shall grant OT a reasonable period for subsequent performance, unless Customer cannot reasonably be expected to tolerate such a grace period or OT refuses to render subsequent performance. Following expiry of such grace period, Customer must declare within a reasonable period whether it requires additional services or asserts the claims set forth below. Customer may, at its choice, either rescind the SOW or Proposal or reduce the compensation. Customer may not rescind the Agreement if the defect in the Work Product is insignificant. In the event of rescission, OT may demand reasonable compensation for use based on the benefits derived from the Work Product by Customer. Such compensation shall be calculated on the basis of a four-year total period of use of the Work Product, less a reasonable reduction in accordance with the degree to which use of the Work Product was restricted as a result of the defect. In addition to rescission or reduction of the compensation, Customer may demand compensatory damages instead of performance or reimbursement of fruitless expenses should fault be attributable to OT.