Template:M summ EUA Annex (d)(vii)

There are times when you wonder whether ISDA’s crack drafting squad™ didn’t fall through some wormhole into a parallel, more paranoid, universe, when drafting their hypotheticals. What, honestly, is going on here?

Unauthorised Transfer

This is Carbon Squad’s round-about way of saying the Allowances you have been delivered, good sir, are hot. Nicked. Half-inched. Fell off the back of an electric truck. Stolen.

Once this regrettable state of affairs has been confirmed by an Appropriate Source, your Allowances become “Affected Allowances”, and the poor sap from whom they were stolen, becomes an Original Affected Party.

If they are nicked then the “No Encumbrances” representation that accompanied their delivery to you has turned out to be false, and there are unwind consequences.

It’s all so bloodless, isn’t it?

Well the bits that don’t resemble the ritualised murder of the English language, that is. We have tried in or premium content section to boil this down to what it is trying to say, but honestly, it is hard to know. It looks like one of those parlour games where you have to describe something really mundane without using any verbs or the letter “e”.

We think the Enbumbrance Loss Amount arises (a) if the Delivering Party acted in bad faith or (b) it didn’t, and the Receiving Party shipped a claim from an Original Affected Party or just anyone else (who? Search me) and despite using its best efforts to knock the claim back, it was unsuccessful. So it is passing on an actually incurred losses.