Loss Limitation and Reallocation Sample Clauses
The Loss Limitation and Reallocation clause sets boundaries on the amount of loss each party is responsible for under a contract and provides a mechanism for redistributing losses if certain limits are reached. Typically, this clause will cap the liability of one or more parties, and if losses exceed these caps, the excess may be reallocated among the remaining parties according to a predetermined formula or proportion. Its core function is to manage and distribute financial risk fairly, preventing any single party from bearing an excessive or disproportionate share of losses.
Loss Limitation and Reallocation. The Losses allocated pursuant to Section 6.2 hereof shall not exceed the maximum amount of Losses that can be so allocated without causing any Member to have an Adjusted Capital Account Deficit at the end of the Fiscal Year. In the event that some, but not all of the Members would have an Adjusted Capital Account Deficit as a consequence of an allocation of Losses pursuant to Section 6.2 hereof, the limitation set forth in this Section 6.3 shall be applied on a Member-by-Member basis and Losses not allocable to any Member as a result of such limitation shall be allocated to the other Members in accordance with the positive balances in such Members’ Capital Accounts so as to allocate the maximum permissible Losses to each Member under Regulations Section 1.704-1(b)(2)(ii)(d).