Minimum Commitment

A Minimum Commitment clause in a contract obligates a party, typically a buyer, to purchase or use a specified minimum quantity or level of services within a defined period. This clause ensures a baseline level of engagement or business for the provider, and often involves financial penalties or adjustments if the commitment is not met.

9 Minimum Commitment examples

  • Description
    Exclusivity, Minimum Purchase Commitment. QUOTIENT agrees to exclusively order, purchase and fully pay for a minimum quantity of [●] units of the Instrument (hereafter referred to as the “Initial Minimum Commitment”) by [●]. If at the end of such period QUOTIENT has not purchased the Initial Minimum Commitment, section 5.2 shall apply.   The remaining [●] units from the original minimum Commitment of [●] units shall be exclusively ordered, purchased and fully paid for by [●] (hereafter referred to as the “Subsequent Minimum Commitment”). If at the end of such period QUOTIENT has not purchased the Subsequent Minimum Commitment, section 5.2 shall apply.
    Document
    Quotient Ltd
  • Description
    Minimum Commitment means the minimum number of Newly Acquired Shares that a Participant must commit to hold for the Holding Period as a condition to be granted an equivalent number of Matching RSUs under the Program. The Minimum Commitment for a Participant shall, unless otherwise determined by the 2 4878-3416-6579 Committee, be the quotient of (a) the product of the percentage established for the Participant as the minimum by the Committee multiplied by the Participant’s base salary as of February 1, 2023 (the “Minimum Dollar Cap”) divided by (b) the average closing price per share of the Company’s common stock over the twenty (20) trading days immediately preceding April 15, 2023, with the result rounded to the nearest whole share; provided that, if the average trading price per share during the first five (5) trading days of the Acquisition Period (the “Acquisition Period Price”) is higher than the average determined pursuant to clause (b), then the Minimum Commitment will be recalculated using the Acquisition Period Price rather than the average determined pursuant to clause (b) so that the total value of the Minimum Commitment does not exceed the Minimum Dollar Cap.
    Document
    CUMMINS INC (CMI)
  • Description
    Minimum Commitment. Customer will pay Google at least [*****] in Fees during the Discount Period (“Minimum Commitment”) even if the Agreement has already expired or been terminated [*****] In return for this Minimum Commitment, starting within 5 business days after the Addendum Effective Date and continuing until the end of the Discount Period, the Customer will receive the Minimum Commitment Discounts below for the Services below: [*****] [*****] 2.1 During the Discount Period, (i) the Fees for the Services in the table above are fixed relative to the published rates in effect on the Addendum Effective Date during any given billing cycle and (ii) the Minimum Commitment Discounts are discounts off of the rates in (i). 2.2 Transition to Then Current List Fees. At any time during the Discount Period, Customer may request (by notifying Google in writing) to be charged the then-current list price for all Services in any SKU group(s) going forward instead of receiving any Minimum Commitment Discounts for the selected SKU group(s). If Customer makes that request: (i) Google will make the corresponding change within [*****] business days, and (ii) Customer may not elect to receive any further Minimum Commitment Discounts for the selected SKU group(s) for the remainder of the Discount Period. 2.3 Minimum Commitment Discounts will apply to all eligible SKUs for each applicable Service. 2.4 [*****] 3. [*****] 4. Minimum Commitment True Up Payment. At the end of the Discount Period or on the effective date of any earlier termination of the Agreement [*****] if Customer has not satisfied its Minimum Commitment, Google will invoice Customer for the difference between the Minimum Commitment and the Fees Customer paid Google for its use of the Services during the Discount Period, each in accordance with Section 2 of the Agreement (“Payment Terms”) (the “True Up Payment”). [*****] 5. [*****] 6. [*****]
    Document
    dMY Technology Group, Inc. IV (PL, PL-WT)
  • Description
    The “Minimum Commitment Amount” (also known as the “MCA”) shall be One Billion Four Hundred Thirteen Million Dollars ($1,413,000,000). The revised MCA in the prior sentence shall be as of the SARA Amendment Number One Effective Date. If Nielsen has provided the notice required by Section 2.2(a) of the Agreement but if for whatever reason the Parties do not agree prior to the end of the Initial Term on a Renewal Term in accordance with Section 2.2(a) of the Agreement, the MCA will be reduced by [**]
    Document
    Nielsen Holdings plc
  • Description
    Minimum Commitment. Unless otherwise agreed by Customer and Polar, should the volume in a given fiscal year fall below the Minimum Commitment for such fiscal year, as defined in the CCA, Customer agrees to pay Polar within [XXX] days following the end of the applicable fiscal year an amount, as defined in the CCA, for the difference between the actual number of Production Wafers for the applicable fiscal year and the Minimum Commitment (“Shortfall Amount”). Payment of the Shortfall Amount will be the Customer’s sole responsibility and liability in the event that the Customer fails to meet the Minimum Commitment.
    Document
    ALLEGRO MICROSYSTEMS, INC. (ALGM)
  • Description
    Minimum Commitment Amount; Commitment Periods. 1.1    The Investment Manager hereby agrees to make reasonable best efforts to manage, and the Investor hereby agrees to make reasonable best efforts to maintain, an investment by the Investor in the Fund in an amount up to the lesser of (a) $1.8 billion or (b) 60% of HIG’s net tangible assets (such lesser amount, the “Minimum Commitment Amount”), in each case, for an entire Commitment Period (as defined below). 1.2    The obligations of the Parties contained in paragraph 1.1 hereof shall continue and remain in full force and effect for a three-year period commencing as of the date first written above (the “Initial Term”) and for rolling three-year periods thereafter, as described below (each such three-year period, a “Commitment Period”). Unless any of the Parties provides written notice of non-renewal to the other Parties prior to the one-year anniversary of the commencement of a Commitment Period (such anniversary, a “Renewal Date”), such Commitment Period shall automatically be extended by one additional year, thereby 1 Effective as of July 1, 2023 Page 2 commencing a new three-year Commitment Period. For example, assuming a Commitment Period were to begin as of July 1, 2023, to the extent the Parties do not provide notice of non-renewal prior to July 1, 2024, a new Commitment Period would commence as of such Renewal Date and extend through June 30, 2026. However, if such a notice is provided prior to the July 1, 2024 Renewal Date, the Commitment Period would terminate as of June 30, 2025 without any renewal.
    Document
    Hamilton Insurance Group, Ltd. (HG)
  • Description
    Minimum Purchase Commitment and Dedicated Capacity. In Exhibit B of the Agreement, as amended by Section 5 of Amendment No. 1, the “Minimum Purchase Commitment and Dedicated Capacity” section is hereby amended as follows: Proterra’s 2019 Minimum Commitment shall be waived. Proterra’s 2020 Minimum Commitment shall be [***] bus bodies; Proterra’s 2021 Minimum Commitment shall be [***] bus bodies; and Proterra’s 2022 Minimum Commitment shall be [***] bus bodies. For the avoidance of doubt, Proterra’s reduction of the 2020 – 2022 Minimum Commitments shall not trigger any minimum commitment penalties under Section 5 of the Agreement.
    Document
    ArcLight Clean Transition Corp.
  • Description
    In the event that the Minimum Commitment is not met, CPDC shall reserve the right to invoice POINT the difference between the actual purchases and Minimum Commitment within 30 days following each yearly anniversary following the Commencement Date. Upon Termination, the Minimum Commitment will be calculated proportionally from the Commencement Date anniversary of the year Termination occurs until the date of Termination.
    Document
    Therapeutics Acquisition Corp.
  • Description
    Minimum Commitment for Manufacturing. 1.1.1During the Term, starting [***], Codiak agrees to be bound to order and purchase a minimum of [***] of Manufacturing Time each year (“Minimum Commitment”), the price of which will be [***]. Subject to the foregoing, if Codiak does not order and purchase the Minimum Commitment during a year, then within [***] of 21   Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.   invoice after the end of such year, Codiak shall be required to pay the difference between the then-current price for the Minimum Commitment and the price for the number of weeks of Manufacturing Time actually ordered and purchased during such year.
    Document
    Codiak BioSciences, Inc.

What is Minimum Commitment clause?

Minimum Commitment refers to an obligation within a contract that mandates one party to engage in or fulfill a certain level of activity or purchase a minimum quantity or value of goods or services over a specified period. This concept ensures a base level of engagement or consumption, providing a level of financial predictability and stability for the provider of the goods or services.

When Should I Use Minimum Commitment?

Minimum Commitment clauses are most useful in contractual agreements where one party requires assurance of a minimal level of transaction or engagement to justify the business arrangement. They are often employed when:

  • The provider needs to cover initial setup costs or ongoing operational expenses.
  • There is a need to ensure consistent usage or engagement to maintain service levels or pricing structures.
  • Businesses are establishing partnerships and need predictability in revenue streams.

How Do I Write a Minimum Commitment clause?

When writing a Minimum Commitment clause, clarity and specificity are paramount. Consider the following components:

  1. Define the Scope: Clearly outline what the minimum commitment entails, whether it’s purchasing a specific number of units, spending a set amount, or engaging in certain activities.

  2. Specify Time Periods: Indicate the duration over which this commitment must be met (e.g., monthly, quarterly, annually).

  3. Explain Obligations and Penalties: Detail what happens if the commitment is not met, including any penalties, cancellation fees, or changes in terms.

  4. Include Exceptions: Be clear about any exceptions or circumstances under which the commitment can be reconsidered or altered.

Example:

“The Buyer agrees to purchase a minimum of 5,000 units of Product X from the Seller each quarter, commencing from the date of this agreement. Should the Buyer fail to meet this commitment, a shortfall penalty of 10% of the value of the unmet portion will be applied.”

Which Contracts Typically Contain Minimum Commitment?

Minimum Commitment clauses are prevalent in several types of contracts, including but not limited to:

  • Supply Agreements: To ensure the buyer maintains a steady consumption of products.
  • Service Contracts: Where service providers need guaranteed minimum usage levels.
  • Franchise Agreements: Ensuring franchisees uphold a minimum level of operational or promotional activities.
  • Telecommunications Contracts: Such as mobile phone plans, where users commit to a certain usage or payment level.
  • SaaS Agreements: To secure minimum levels of service subscription or usage from clients.

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