Template:Isda 3(d) summ

The fabulous Section {{{{{1}}}|3(d)}} representation, giving one’s counterparty the right to close out should any so-designated representations turn out not to be true. This is sure to occupy an inordinate amount of your negotiation time — in that it occupies any time at all — because you are as likely to be hit in the face by a live flying starfish in the driest part of the Gobi Desert as you are to close out an ISDA Master Agreement because your counterparty is late in preparing its annual accounts. But that’s a personal view and you may not rely on it.

The {{{{{1}}}|3(d)}} representation, in the documents for delivery table in the Schedule, therefore covers only the accuracy and completeness of {{{{{1}}}|Specified Information}} and not (for example) whether {{{{{1}}}|Specified Information}} is delivered at all. For that, see Section {{{{{1}}}|4(a)}} - {{{{{1}}}|Furnish Specified Information}}.

What’s that Section {{{{{1}}}|3(d)}} representation malarkey?

If one is required to “furnish” {{{{{1}}}|Specified Information}} under Section {{{{{1}}}|4}}, two things can go wrong:

• No show: one can fail to provide it, at all, in which case there is a {{{{{1}}}|Breach of Agreement}}, but be warned: the period before one can enforce such a failure, judged by the yardstick of modern financial contracts, is long enough for a whole kingdom of dinosaurs to evolve and be wiped out; or
• It’s cobblers: one can provide the {{{{{1}}}|Specified Information}}, on time, but it can be a total pile of horse ordure. Now, here is a trick for young players: if your {{{{{1}}}|Specified Information}} is, or turns out to be, false, you have no remedy unless you have designated that it is “subject to the Section {{{{{1}}}|3(d)}} representation”. That is the one that promises it is accurate and not misleading.

Now you might ask what good an item of {{{{{1}}}|Specified Information}} can possibly be, if Section {{{{{1}}}|3(d)}} didn’t apply and it could be just made up on the spot without fear of retribution — as a youngster, the JC certainly asked that question, and has repeated it over many years, and is yet to hear a good answer — but all we can presume is that in its tireless quest to cater for the unguessable predilections of the negotiating community, ISDA’s crack drafting squad™ left this preposterous option open just in case. It wouldn’t be the first time.