Force Majeure Event - 1992 ISDA Provision

1992 ISDA Master Agreement A Jolly Contrarian owner’s manual™ Force Majeure Event in a Nutshell™ The JC’s Nutshell™ summary of this term has moved uptown to the subscription-only ninja tier. For the cost of ½ a weekly 🍺 you can get it here. Sign up at Substack. You can even ask questions! Ask about it here. Force Majeure Event in all its glory No such clause. edit Related agreements and comparisons Related Agreements Click here for the text of Section Force Majeure Event in the 2002 ISDA Comparisons There is no Force Majeure Event in the 1992 ISDA (but there is an ISDA Illegality/Force Majeure Protocol). Resources and Navigation Resources Wikitext | Nutshell wikitext | 2002 ISDA wikitext | 2002 vs 1992 Showdown | 2006 ISDA Definitions | 2008 ISDA Navigation Preamble | 1 • (a) (b) (c) | 2 • (a) (b) (c) (d) (e) | 3 • (a) (b) (c) (d) (e) (f) | 4 • (a) (b) (c) (d) (e) | 5 • 5(a) Events of Default: 5(a)(i) Failure to Pay or Deliver 5(a)(ii) Breach of Agreement 5(a)(iii) Credit Support Default 5(a)(iv) Misrepresentation 5(a)(v) Default Under Specified Transaction 5(a)(vi) Cross Default 5(a)(vii) Bankruptcy 5(a)(viii) Merger Without Assumption 5(b) Termination Events: 5(b)(i) Illegality 5(b)(ii) Tax Event 5(b)(iii) Tax Event Upon Merger 5(b)(iv) Credit Event Upon Merger 5(b)(v) Additional Termination Event (c) | 6 • (a) (b) (c) (d) (e) | 7 | 8 • (a) (b) (c) (d) | 9 • (a) (b) (c) (d) (e) (f) (g) | 10 | 11 | 12 • (a) (b) | 13 • (a) (b) (c) (d) | 14 | Index: Click ᐅ to expand: 2002 ISDA 1992 ISDA Premium version of this page

Overview

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Note that, while the 1992 ISDA does not contain the concept of force majeure, there is an ISDA Illegality/Force Majeure Protocol (see here) which antediluvian swap counterparties can signed to adopt/incorporate the relevant parts.

Summary

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Force majeure in the 1992 ISDA

There is no equivalent to the 2002 ISDA’s Force Majeure Event in the 1992 ISDA. You could, and many old-timers do, write an Impossibility clause into the Schedule, which endeavoured to do the same thing. Or you could incorporate the 2002 ISDA’s Force Majeure Event into the 1992 ISDA — as long as you carry the concept through to its logical conclusion i.e.:

• Include a “Hierarchy of Events” to be clear what happens where the same event is both a Event of Default and a Force Majeure Event;
• Consider the impact of a deferral on the Early Termination Amount etc.

The concept also impacts the basis of close-out because the 2002 ISDA requires true mids for valuation i.e, not simply the average of each party’s view of the bid/offer where a Force Majeure Event (or Illegality) occurs, which is effectively what you get under the 1992 ISDA with a “Two Affected Parties” option.

The easiest way of achieving this is to sign up to the ISDA protocol on Illegality and Force Majeure.

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• The JC’s famous Nutshell™ summary of this clause

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See also

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