Understanding Termination Payment Provisions in DBFOM Contracts

CA Rakesh T | Last updated: 21 February 2024

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Termination payment provisions are a vital part of DBFOM contracts, especially in the GCC. These clauses dictate the compensation process if a project ends early, determining whether the asset is returned to the client or cleared by the contractor. The amount paid depends heavily on the reason for termination, significantly influencing a project's financial viability for sponsors and lenders.

In DBFOM contracts, particularly in the GCC region, the Termination Payment clause is crucial. It outlines what happens and who gets compensated if the project is terminated early. How well this clause is defined directly affects the bankability of the project forboth sponsors and lenders. If the

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CA Rakesh T

Chartered Accountant

I am a Chartered Accountant living in the UAE. Find me here: (copy and paste the link below in your browser if you cannot click on it) Join Me Here if the above link isnt working, then copy and paste the link below. https://rakesht.substack.com/ About me: 1. I love helping people 2. l ... Read more

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