Chilled water supply agreements are becoming increasingly popular in the realm of commercial real estate. These agreements are essentially contracts between a property owner and a vendor, in which the vendor agrees to supply chilled water to the property for cooling and air conditioning purposes.
Chilled water is a highly efficient and cost-effective way of cooling large buildings and facilities, and as such, it is commonly used in commercial properties such as office buildings, hospitals, data centers, and manufacturing facilities. Chilled water is produced by a central plant and distributed through a network of pipes and valves to the various tenant spaces within the building.
Chilled water supply agreements typically include a number of key terms and conditions. These may include the quantity and quality of the chilled water to be supplied, the delivery schedule, pricing and payment terms, and any warranties or guarantees provided by the vendor.
One important aspect of these agreements is the concept of „capacity charges“. Capacity charges are fees charged by the vendor for reserving a certain amount of capacity within the chilled water system for the property owner`s use. This ensures that the property owner has access to a reliable source of chilled water at all times, even during periods of peak demand.
Another key consideration in these agreements is the issue of „exclusivity“. Exclusivity provisions ensure that the property owner has exclusive rights to the vendor`s chilled water supply within the building or facility, and that no other tenants or occupants can access the same supply.
From a legal standpoint, it is important for property owners to ensure that their chilled water supply agreements are carefully drafted and reviewed by qualified legal counsel. This can help to ensure that the terms of the agreement are clear, enforceable, and protect the interests of all parties involved.
Overall, chilled water supply agreements are an important tool for property owners seeking to efficiently and cost-effectively cool their buildings and facilities. By carefully negotiating and drafting these agreements, property owners can ensure that they have reliable access to high-quality chilled water, at a reasonable cost, and with the necessary legal protections in place.