Interpretation - ISDA Provision

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2002 ISDA Master Agreement

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1 in a Nutshell

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1 in all its glory

1 Interpretation

1(a) Definitions. The terms defined in Section 14 and elsewhere in this Master Agreement will have the meanings therein specified for the purpose of this Master Agreement.
1(b) Inconsistency. In the event of any inconsistency between the provisions of the Schedule and the other provisions of this Master Agreement, the Schedule will prevail. In the event of any inconsistency between the provisions of any Confirmation and this Master Agreement, such Confirmation will prevail for the purpose of the relevant Transaction.
1(c) Single Agreement. All Transactions are entered into in reliance on the fact that this Master Agreement and all Confirmations form a single agreement between the parties (collectively referred to as this “Agreement”), and the parties would not otherwise enter into any Transactions.

Related agreements and comparisons

Click here for the text of Section 1 in the 1992 ISDA
Click to compare this section in the 1992 ISDA and 2002 ISDA.

Resources and Navigation

Resources Wikitext | Nutshell wikitext | 1992 ISDA wikitext | 2002 vs 1992 Showdown | 2006 ISDA Definitions | 2008 ISDA | JC’s ISDA code project

Navigation Preamble | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13 | 14
Events of Default: 5(a)(i) Failure to Pay or Deliver5(a)(ii) Breach of Agreement5(a)(iii) Credit Support Default5(a)(iv) Misrepresentation5(a)(v) Default Under Specified Transaction5(a)(vi) Cross Default5(a)(vii) Bankruptcy5(a)(viii) Merger without Assumption
Termination Events: 5(b)(i) Illegality5(b)(ii) Force Majeure Event5(b)(iii) Tax Event5(b)(iv) Tax Event Upon Merger5(b)(v) Credit Event Upon Merger5(b)(vi) Additional Termination Event

Index: Click to expand:


But for some refreshing loosie-goosiness in the 2002 ISDA about where one might otherwise define terms, the text of Section 1 is the same in each version of the ISDA Master Agreement.



Section 1 is a gentle introduction indeed to the dappled world of the ISDA Master Agreement: much coming from the “goes without saying, but let’s say it anyway” dept of legal wordwrightery — a large department indeed, in the annals of modern legal practice.

Section 1(a)

The large slew of definitions are set out in Section 14. the JC considers each in its own write elsewhere.

Section 1(b)

It wouldn’t be ISDA if there weren’t a hierarchy clause; all this really establishes is the obvious: the pre-printed ISDA Master Agreement itself sits at the bottom and is modified between the counterparties by its Schedule; once negotiated and stuck into the netting database, the Schedule basically sits there unregarded and is modified as needs be for each Transaction under the Confirmation. In point of fact the Confirmations don’t tend to modify anything in the Master and Schedule so much as build on them, but if there is a consistency — and with a document as pedantic and overwrought as the ISDA you just never know — then the most specific, recently edited document will be the one that prevails.

Section 1(c)

Section 1(c) starts getting a bit tastier in that it comprises the Single Agreement. This is deep ISDA lore, from which all the close-out netting that gives the ISDA Master Agreement its capital efficiency wings flows.


In a nutshell — unless you are doing repackagings, and even then don’t get carried away — make sure you understand what Section 1 is there fore, but don’t mess with it.


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See also

Equivalents in other agreements