Retention Security Clause Samples
The Retention Security clause establishes a requirement for one party, typically the contractor, to provide a financial guarantee or holdback to the other party as security for the performance of contractual obligations. This security is often in the form of a cash retention, bank guarantee, or insurance bond, and is usually withheld from progress payments or provided upfront. The retained amount is released upon satisfactory completion of the work or after a specified defects liability period. The core function of this clause is to protect the client against incomplete or defective work by ensuring funds are available to remedy any issues, thereby allocating risk and incentivizing proper performance.
Retention Security. Amounts provided by Seller as Contract Security will be retained by NYSERDA as follows:
a. In the amount of (50%) of the amount provided if the Bidder elects to terminate this Agreement on or before July 15, 2007;
b. At a prorated amount if the Bid Capacity of the Bid Facility that is in Commercial Operation on the Commercial Operation Milestone Date is less that the Bid Capacity of the Bid Facility described in the Bid Proposal. Such amount that will be retained, expressed a percentage of the total Contract Security, will be equal to the Bid Capacity of the Bid Facility described in the Bid Proposal minus the Bid Capacity of the Bid Facility that enters Commercial Operation on or before the Commercial Operation Milestone Date; divided by the Bid Capacity of the Bid Facility described in the Bid Proposal.
c. In its entirety if the Seller elects to terminate the contract under Section 14.01(e) of the RPS Standard Form Contract.