Legal Definitions - hell-or-high-water clause

A hell-or-high-water clause is a provision found in a lease agreement for personal property (movable items, not real estate) that creates an unconditional obligation for the lessee (the party leasing the item) to continue making all scheduled payments to the lessor (the owner) under virtually any circumstances. This means the lessee must pay regardless of whether the leased item becomes damaged, defective, unusable, or even completely destroyed. The clause also typically requires payment even if the lessor fails to fulfill its own obligations under the lease. Essentially, this clause shifts nearly all risk of loss or malfunction of the leased property onto the lessee, ensuring the lessor receives full payment no matter what unforeseen events occur.

• Example 1: Construction Equipment Lease

  A construction company leases a specialized, heavy-duty excavator for a large infrastructure project. The lease agreement contains a hell-or-high-water clause. Midway through the project, the excavator suffers a catastrophic engine failure due to a manufacturing defect, rendering it completely inoperable and requiring extensive, costly repairs that take months. Despite the excavator being unusable and the defect being outside the construction company's control, the hell-or-high-water clause legally binds them to continue making all lease payments for the full term, even while they are forced to rent a replacement machine from another supplier to keep the project on schedule.

• Example 2: Medical Imaging Device

  A small diagnostic clinic leases a state-of-the-art MRI machine from a medical equipment supplier. The lease includes a hell-or-high-water clause. One evening, a severe electrical surge during a thunderstorm damages the MRI machine beyond repair, making it impossible to conduct patient scans. Because of the hell-or-high-water clause, the clinic remains obligated to continue paying the full monthly lease payments for the destroyed MRI machine for the remainder of the lease term, even though it can no longer generate revenue from the device and must now seek a replacement.

• Example 3: Commercial Fleet Vehicles

  A package delivery service leases a fleet of twenty new vans for its operations, and the lease agreement for each van includes a hell-or-high-water clause. Six months into the lease, one of the vans is stolen from a parking lot and never recovered, and another is involved in a severe accident and declared a total loss by the insurance company. Under the hell-or-high-water clause, the delivery service must continue to make all lease payments for both the stolen and the destroyed vans, just as if they were still operational, for the entire remaining lease term, even as they incur additional costs to replace them.