# Substantial Impairment Agreement
**This Substantial Impairment Agreement ("Agreement") is made and entered into as of [Date], by and between [Party 1 Name], with an address at [Party 1 Address] ("Party 1"), and [Party 2 Name], with an address at [Party 2 Address] ("Party 2").**
## Recitals
WHEREAS, Party 1 and Party 2 acknowledge that certain circumstances may lead to substantial impairment of one party’s ability to fulfill obligations under this Agreement;
WHEREAS, both parties seek to outline the terms and conditions under which they will operate in the event of substantial impairment;
NOW, THEREFORE, in consideration of the mutual covenants and promises herein contained, the parties hereby agree as follows:
## 1. Definition of Substantial Impairment
**Substantial Impairment** shall refer to any condition or circumstance that severely limits a party’s ability to fulfill their obligations as set forth in this Agreement, including but not limited to:
- Physical disability or medical conditions
- Economic hardship or bankruptcy
- Legal restrictions or sanctions
- Acts of God or natural disasters
## 2. Notification Procedure
In the event of substantial impairment, the affected party agrees to notify the other party within [Number of Days] days of becoming aware of the condition. Such notification must include:
- A description of the nature of the impairment
- The anticipated duration of the impairment
- Any impact on the obligations under this Agreement
## 3. Rights and Obligations
### 3.1 Obligations of Party 1
Party 1 shall:
- Provide any necessary assistance to Party 2 to help mitigate the effects of the impairment.
- Cooperate in any reasonable request to sustain the terms of this Agreement.
### 3.2 Obligations of Party 2
Party 2 shall:
- Assess its own capacity to fulfill obligations and communicate any adjustments to Party 1.
- Explore all available options to continue operations despite the substantial impairment.
## 4. Modifications to Agreement
In the event of a substantial impairment affecting one party, the parties may negotiate modifications to this Agreement to accommodate the new circumstances. Any modifications must be in writing and signed by both parties.
## 5. Termination
Either party may terminate this Agreement upon [Number of Days] days’ written notice if substantial impairment persists for a period exceeding [Number of Days] days. Upon termination, the parties shall account for any obligations performed up to the date of termination.
## 6. Confidentiality
Both parties agree to maintain confidentiality regarding the nature of the impairment and its effects on this Agreement, except as required by law or as necessary to fulfill the terms of this Agreement.
## 7. Governing Law
This Agreement shall be governed by and construed in accordance with the laws of the State of [State Name], without regard to its conflict of law principles.
## 8. Entire Agreement
This Agreement constitutes the entire understanding and agreement between the parties with respect to the subject matter hereof and supersedes all prior discussions, agreements, and understandings, both written and oral.
## 9. Signatures
IN WITNESS WHEREOF, the parties have executed this Substantial Impairment Agreement as of the date first above written.
**Party 1: [Party 1 Name]**
Signature: __________________________
Name: [Name]
Title: [Title]
Date: [Date]
**Party 2: [Party 2 Name]**
Signature: __________________________
Name: [Name]
Title: [Title]
Date: [Date]
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**Note:** This document is a template and should be customized to meet the specific needs and circumstances of the parties involved. It is advisable to seek legal counsel when drafting or entering into any legal agreement.