Hell or High Water (HHW) clauses are part of the Ten Commandments of equipment finance. Or, as a TV ad for a certain credit card used to extoll, “don’t leave home without it.” UCC Section 2A-407 recognizes this concept for “true” leases, with respect to Article 2A “finance leases” that are not a consumer lease: “the lessee’s promises under the lease contract become irrevocable and independent upon the lessee’s acceptance of the goods.” For all other kinds of agreements, including non-true leases and loans, UCC Section 9-403 (Official Comment 2) validates a waiver of defenses agreement between an obligor and its counterparty that the former “will not assert against an assignee claims and defenses which it may have against the assignor.”
Although courts generally have upheld HHW clauses, even where UCC provisions have not been implicated, recent case law emphasizes that financiers need to be aware of circumstances which may undermine their expectations of a speedy disposition of their claims against a defaulting lessee or borrower. For example, in Macquarie Equipment Capital v. LA Semiconductor LLC, the U.S. District Court ruled that the HHW clause was of “ironclad enforceability” under New York law, which governed the lease. But the court denied the lessor’s motion for summary judgment, reasoning that the lessee had requested a “consultation” with the lessor to minimize any disruption to the lessee’s operations which might have been occasioned by repossession of the leased goods. As a result, replevin was not awarded solely upon the lessor’s motion papers. The lessor was required to proceed to trial to obtain the benefit of the HHW clause.
Notably, in Cerco Bridge Loans 6 LLC v. Schenker, a guarantor escaped liability under a HHW agreement. Even though the guaranty agreement in this 2025 case was “an irrevocable, absolute, continuing guaranty of payment and performance and not a guaranty of collection,” the “Guaranteed Obligations” were limited in both number and scope. Because it was a “bad boy” guaranty, and none of the specified events to trigger the guaranty had occurred, the mere fact of a payment default did not trigger the guarantor’s liability. The court further reasoned that if the parties had intended the guarantor to be liable “upon any default by Borrower on the underlying debt, then there would be no reason to separately enumerate a list of conditions that trigger full recourse liability.” This decision echoes a recurring theme in case law: that a HHW clause in a guaranty is only enforceable if the underlying agreement, or conditions for triggering the guaranty, are in existence.
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"Hell or High Water—Maybe," by Stephen T. Whelan was published in the October 2025 issue of Equipment Leasing and Finance Association’s Equipment Leasing & Finance Magazine.
