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A reservation of rights, in American legal practice, is a statement that an individual, company, or other organization is intentionally retaining full legal rights to warn others of those rights.
A letter from a lender to a borrower in which the lender reserves its rights under a facility agreement (also known as a loan agreement) to take action against the borrower in respect of a breach of the facility agreement.
This clause provides that a lender maintains all of its rights and remedies irrespective of any action or inaction on the part of lender. This template includes practical guidance and drafting notes.
A demand letter is usually an effort to settle a matter without litigation, but the reservation of rights clause warns the recipient that the sender may still file the lawsuit, or take other actions, if the parties do not resolve the dispute.
A Reservation of Rights acts to protect an insurer from any argument by an insured, based on an insurer's behaviour, that it has waived the right to deny coverage for a claim or raise other suitable defences.