Template:Isda 3(d) gen

More on covered by the Section 3(d) Representation

We went digging a little deeper. These are the only examples we could find before we got bored looking. In each case we are not persuaded these caveats accommodate anyone other than our value-adding learned friends:

Legal opinions

We suppose this is excluded because the Party to the ISDA is not the author of the legal opinion, nor professionally competent to pass on its contents (hence the need for the legal opinion in the first place), so should hardly be expected to be held to account should it turn out to be wrong.

But this, we submit, is to misunderstand in a profound way the point of a legal contract. Unlike criminal or even tort law, the law of contract is not an instrument of moral judgment. It cares only about economics: that one does, or does not, do what one has promised or — as in this case — that what one has represented to you is, or is not, true. The law of contract is broadly incurious about why.

The object of a legal opinion is to confirm the accuracy of a legal representation. Instead of simply representing that, for example, you have the regulatory permission to act as a swap dealer, you have a legal opinion to confirms that fact, from one who should know. If what that that legal opinion says is not true — if that one who should know in fact does not — then regardless of whose fault this is, or how egregious has been her negligence in being at fault, the regulatory permission required does not obtain, and the comfort your counterparty seeks from that legal opinion is misplaced. The representation is false, and the counterparty should be allowed out as a result.