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GMSLA Anatomy™
In a Nutshell™ Clause 13:
13. Lender’s Warranties
Each Party warrants on a continuing basis that when it is a Lender:
- (a) it has capacity and authority to perform its obligations;
- (b) there are no restrictions on it lending Securities or performing its obligations under this Agreement;
- (c) it is able to pass legal and beneficial ownership of Securities lent under this Agreement to Borrower free from encumbrances; and
- (d) it is acts as a principal (except under Agency Loans).
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2010 GMSLA full text of Clause 13:
13. Lender’s Warranties
Each Party hereby warrants and undertakes to the other on a continuing basis to the intent that such warranties shall survive the completion of any transaction contemplated herein that, where acting as a Lender:
- (a) it is duly authorised and empowered to perform its duties and obligations under this Agreement;
- (b) it is not restricted under the terms of its constitution or in any other manner from lending Securities in accordance with this Agreement or from otherwise performing its obligations hereunder;
- (c) it is absolutely entitled to pass full legal and beneficial ownership of all Securities provided by it hereunder to Borrower free from all liens, charges and encumbrances; and
- (d) it is acting as principal in respect of this Agreement, other than in respect of an Agency Loan.
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Enthusiastic minds might have noticed there are no “Representations” as such in the 2010 GMSLA. But there are Warranties, and these —except in one arcane and theoretically[1]) important way — amount to the same thing.
(precis: A representation is a pre-contractual statement which induces your entry into a contract, the remedy for negligence about which is the avoidance of your obligations under the contract altogether; a warranty is a contractual term, the remedy for breach of which is damages under the contract.
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References
- ↑ But not practically, unless you are some kind of super spod.