What does the hell-or-high-water clause in a finance lease require?

• A. It reduces the lessee's obligations to pay if the asset is unavailable.
• B. It allows the lessor to terminate the lease for convenience.
• C. It requires the lessee to fulfill payment obligations regardless of external conditions.
• D. It determines how residual value is calculated.

Answer: (C)

A hell-or-high-water clause in a finance lease means the lessee must keep making lease payments regardless of any events that affect the asset or external conditions. It guarantees the lessor receives rent no matter what happens—delivery problems, asset unavailability, damage, or other disruptions don’t excuse payment obligations.

That’s why this is the best answer: the clause ensures the lessee’s payment duties remain intact despite adverse circumstances, rather than reducing payments, allowing termination for convenience, or dealing with how the asset’s residual value is handled.