Capacity Payment - Definition - Law Dictionary Home Dictionary Definition capacity-payment

Definition :

Capacity payment, is any sum included in the consideration under a contract for the sale of oil consisting of gas won from an oil field which (1) is payable by the buyer at specified times or in respect of specified periods, and (2) is payable whether or not oil is delivered under the contract at particular times or in particular periods, even though it may very by reference to deliveries of oil or other factors, and (3) does not under the terms of the contract, or by virtue of certain statutory provisions, fall to be treated wholly or partly as an advance payment for oil to be delivered at some time after the times or periods at or in respect of which that sum is payable, Halsbury's Laws of England, Vol. 19(2), para 1867, p. 1337.