Breach of Agreement - ISDA Provision

ISDA Anatomy™ →Go uptown In a Nutshell™ Section 5(a)(ii): 5(a)(ii) “Breach of Agreement” means: (1) a party breaches any of its obligations under the Agreement and doesn’t remedy the breach within 30 days of the other party’s notice other than the following: (a) a Failure to Pay or Deliver; (b) owning up to a Termination Event; (c) not providing any necessary tax documents; (d) any of its tax representations not being true; or (2) a party repudiates this ISDA Master Agreement or any Transaction. view template 2002 ISDA full text of Section 5(a)(ii): 5(a)(ii) Breach of Agreement; Repudiation of Agreement. (1) Failure by the party to comply with or perform any agreement or obligation (other than an obligation to make any payment under this Agreement or delivery under Section 2(a)(i) or 9(h)(i)(2) or (4) or to give notice of a Termination Event or any agreement or obligation under Section 4(a)(i), 4(a)(iii) or 4(d)) to be complied with or performed by the party in accordance with this Agreement if such failure is not remedied within 30 days after notice of such failure is given to the party; or (2) the party disaffirms, disclaims, repudiates or rejects, in whole or in part, or challenges the validity of, this Master Agreement, any Confirmation executed and delivered by that party or any Transaction evidenced by such a Confirmation (or such action is taken by any person or entity appointed or empowered to operate it or act on its behalf); view template Click here for the text of Section 5(a)(ii) in the 1992 ISDA Index: Click ᐅ to expand: ISDA Navigation See ISDA Comparison for a comparison between the 1992 ISDA and the 2002 ISDA. The Varieties of ISDA Experience Subject 2002 (wikitext) 1992 (wikitext) 1987 (wikitext) Preamble Pre Pre Pre Interpretation 1 1 1 Obligns/Payment 2 2 2 Representations 3 3 3 Agreements 4 4 4 EODs & Term Events 5 Events of Default: FTPD • Breach • CSD • Misrep • DUST • Cross Default • Bankruptcy • MWA Termination Events: Illegality • FM • Tax Event • TEUM • CEUM • ATE 5 Events of Default: FTPD • Breach • CSD • Misrep • DUST • Cross Default • Bankruptcy • MWA Termination Events: Illegality • Tax Event • TEUM • CEUM • ATE 5 Events of Default: FTPD • Breach • CSD • Misrep • DUSS • Cross Default • Bankruptcy • MWA Termination Events: Illegality • Tax Event • TEUM • CEUM Early Termination 6 Early Termination: ET right on EOD • ET right on TE • Effect of Designation • Calculations; Payment Date • Payments on ET • Set-off 6 Early Termination: ET right on EOD • ET right on TE • Effect of Designation • Calculations • Payments on ET • Set-off 6 Early Termination: ET right on EOD • ET right on TE • Effect of Designation • Calculations • Payments on ET Transfer 7 7 7 Contractual Currency 8 8 8 Miscellaneous 9 9 9 Offices; Multibranch Parties 10 10 10 Expenses 11 11 11 Notices 12 12 12 Governing Law 13 13 13 Definitions 14 14 14 Schedule Schedule Schedule Schedule Termination Provisions Part 1 Part 1 Part 1 Tax Representations Part 2 Part 2 Part 2 Documents for Delivery Part 3 Part 3 Part 3 Miscellaneous Part 4 Part 4 Part 4 Other Provisions Part 5 Part 5 Part 5 Tell me more Sign up for our newsletter — or just get in touch: for ½ a weekly 🍺 you get to consult JC. Ask about it here.

Double negative heaven in 5(a)(ii)(1): not complying with an obligation that is not (inter alia) a payment obligation if not remedied within a month.

A failure to perform any agreement, if not cured within 30 days, is an Event of Default, except for

(i) those failures who have their own special Event of Default (ie Failure to Pay or Deliver under Section 5(a)(i)) or

(ii) those that relate to tax, and which mean the party not complying will just get clipped for tax it rather would not.

Failure to Pay or Deliver carve-out

Why is Section 5(a)(i) specifically carved out? No good reason other than general ISDA neurosis/delight in over-communicating. Yes, it has its own separate Event of Default, with a much tighter timeline, so in practice one would never realistically trigger a failure to pay as a 5(a)(ii) event, but it is still a bit fussy carving it out.

ISDA™. Never knowingly outfussed.™

It is an Event of Default not to supply documents for delivery

A failure to Furnish Specified Information — ie those documents for delivery specified in Part 3 of the ISDA Master Agreement, adverted to in Section 4(a)(ii) will therefore be an Event of Default, although you have to navigate a needlessly tortured string of clause cross references and double negatives to settle upon this conclusion.

Differences

Note the addition of Repudiation of Agreement to the 2002 ISDA. You don't really need to define repudiation as a breach justifying termination of a contract, because that’s what it is by definition but that has never stopped an ISDA drafting committee before.

See also

• Furnish Specified Information and sub-limb 4(a)(ii) (documents for delivery) but not 4(a)(i) or 4(a)(iii) (which relate to tax documents).
• Section 3(d) representations.