First Method and Loss Clause Samples
The 'First Method and Loss' clause establishes the order and responsibility for addressing losses or damages in a contractual relationship. Typically, this clause specifies which party must first attempt to recover losses, such as through insurance claims or third-party recovery, before seeking compensation from the other party. For example, if property is damaged, the party in possession may be required to file an insurance claim before the owner can pursue reimbursement. The core function of this clause is to allocate risk and clarify the process for loss recovery, thereby minimizing disputes and ensuring that losses are addressed efficiently and fairly.
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First Method and Loss. If the First Method and Loss apply, the Defaulting Party will pay to the Non-defaulting Party, if a positive number, the Non-defaulting Party's Loss in respect of this Agreement.