Template:Event of default vs fundamental breach: Difference between revisions

Template:Event of default vs fundamental breach (view source)

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 An '''[[event of default]]''', on the other hand, ''is'' articulated, usually at [[Tedious|painful length]], in the [[contract]], which then contains detailed provisions setting out what should happen, to whom, by when, if an [[event of default]] befalls either party.
-Now while the same set of circumstances might be an [[event of default]] ''and'' a [[Fundamental breach|fundamental breach of contract]] — almost certainly will be, in fact — treating a case as an [[event of default]] is to see it as “infra-contractual action”,<ref>I just made that expression up, by the way</ref>, contemplated by and provided for ''within the four corners of the contract''; while treating it as a [[fundamental breach]] is thereby ''to cast the whole contract into the fire''. For what good are the promises in it, after all, if the other fellow won’t keep them?
+Now while the same set of circumstances might be an [[event of default]] ''and'' a [[Fundamental breach|fundamental breach of contract]] — almost certainly will be, in fact — treating a case as an [[event of default]] is to see it as “infra-contractual action”,<ref>I just made that expression up, by the way</ref> contemplated by and provided for ''within the four corners of the [[contract]]''; while treating it as a [[fundamental breach]] is thereby ''to cast the whole contract into the fire''. For what good are the promises in it, after all, if the other fellow won’t keep them?
-Thus alleging [[fundamental breach]] is to cancel the contract, ''with'' prejudice to your remaining rights under it, and to prostrate yourself at the feet of the [[Queen’s Bench Division]] for redress by way of damages, being the liquidated present value of those remaining rights, determined by reference to golden streams of the [[common law]] precedent, whose terms might not be quite as advantageous to you as those you might have asked for ''were you able to agree them in advance''. But these [[common law]] principles are ''about'' the contract, they are not rules ''of'' the contract. The [[contract]] itself it a smoldering husk.
-Thus an [[event of default]] leaves the [[contract]] on foot, while you exercise your options to extract the value of your party’s commitments under it, ''without'' resorting to the courts.
+Thus, alleging [[fundamental breach]] is to terminate the contract ''with prejudice to your remaining rights under it'', and to prostrate yourself at the feet of the [[Queen’s Bench Division]] for redress by way of [[damages]], being the [[Liquidated damages|liquidated]] [[net]] [[present value]] of those remaining rights, determined by reference to the golden streams of [[common law]] precedent, whose terms might not be quite as advantageous to you as those you might have asked for ''were you able to agree them in advance''. These [[common law]] principles are ''about'' the contract, they are not rules ''of'' the contract. The [[contract]] itself it a smoldering husk.
-In most scenarios, which route you take might not make a whole heap of difference. In a contract between a supplier and a client, or a borrower and a lender, there is a fundamental asymmetry you can’t cure with fancy words: if the guy owes you money that he hasn’t paid, you will need the court’s help to get it out of him. But master trading contracts are much more normally bilateral. You have [[exposure]], I have [[collateral]]. Maybe, the next day, ''I'' have [[exposure]] and ''you'' have [[collateral]]. There is a self-help option, and it is quicker and cleaner than praying for relief from the QBD. But exercising it requires the contract to ''still be there''.
+Thus, an [[event of default]] leaves the [[contract]] on foot, while you exercise your options to extract the value of your party’s commitments under it, ''without'' resorting to the courts. A fundamental breach requires the intervention of our learned friends
+Now in most scenarios, which route you take might not make a whole heap of difference: In a contract between a supplier and consumer, or lender and borrower, there is a fundamental asymmetry you can’t cure with fancy words: if the guy owes you stuff, or money, that he hasn’t ponied up, you will need the court’s help to get it out of him. But master trading contracts are normally more bilateral than that: ''you'' have [[exposure]], ''I'' have [[collateral]]. Maybe, the next day, ''I'' have [[exposure]] and ''you'' have [[collateral]]. [[Close-out]] is a self-help option, and it is quicker and cleaner than praying for relief from the [[QBD]]. But exercising it requires the contract to ''still be there''.