Template:M summ 2002 ISDA 5(c): Difference between revisions

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Created page with "In which the JC thinks he might have found a ''bona fide'' use for the awful legalism “and/or”. Crikey. What to do if the same thing counts as an {{isdaprov|Illeg..."
 
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In which the [[JC]] thinks he might have found a ''bona fide'' use for the awful legalism “[[and/or]]”. Crikey.
{{isda 5(c) summ|isdaprov}}
 
What to do if the same thing counts as an {{isdaprov|Illegality}} ''[[and/or]]'' a {{isdaprov|Force Majeure Event}} ''[[and]]'' an {{isdaprov|Event of Default}} ''[[and/or]]'' a {{isdaprov|Termination Event}}.
 
Why do we need this? Remember an {{isdaprov|Event of Default}} is an apocalyptic disaster scenario which blows your whole agreement up with extreme prejudice; a {{isdaprov|Termination Event}} is just “one of those things” which justifies termination, but may relate only to a single transaction: it isn’t something one needs necessarily to hang one’s head about.
 
A {{isdaprov|Force Majeure Event}} is something that is so beyond one’s control or expectation that it shouldn’t count as an {{isdaprov|Event of Default}} or even a {{isdaprov|Termination Event}} ''at all''.
 
An {{isdaprov|Event of Default}} has more severe consequences for the [[counterparty]]. Well, the whole point about [[Force Majeure Event - ISDA Provision|force majeure]] is that it is meant to give you an excuse not to perform your agreement. An {{isdaprov|Illegality}} is only a {{isdaprov|Termination Event}} (one can’t be criticised if they go and change the law on you, can one?).

Latest revision as of 15:45, 27 December 2023

Compared with its Byzantine equivalent in the 2002 ISDA the 1992 ISDA is a Spartan cause indeed: it is as if ISDA’s crack drafting squad™ assumed all ISDA users would be cold, rational economists who instinctively appreciate the difference between causation and correlation — or hadn’t considered the virtual certainty that they would not be — and therefore did not spell out that where your Event of Default is itself, and of itself, the Illegality, this hierarchy clause will intervene but it will not where your it simply is coincidental with one. I.e., if you were merrily defaulting under the ISDA Master Agreement anyway, and along came an Illegality impacting your ability to perform some other aspect of the Agreement, you can’t dodge the bullet.

In the 2002 ISDA the JC thinks he might have found a bona fide use for the awful legalism “and/or”. What to do if the same thing counts as an Illegality and/or a Force Majeure Event and an Event of Default and/or a Termination Event.

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