2002 ISDA Master Agreement
A Jolly Contrarian owner’s manual
Section 7 in a Nutshell™
Use at your own risk, campers!
Subject to Section 6(b)(ii), neither party may transfer any interest in or obligation under this Agreement without the other party’s prior written consent, except:―
- 7(a) Due to a merger with, or consolidation of substantially all of its assets into, another entity; and
- 7(b) A transfer of its rights to an Early Termination Amount under Sections 8, 9(h) and 11.
Section 7 in full
Subject to Section 6(b)(ii) and to the extent permitted by applicable law, neither this Agreement nor any interest or obligation in or under this Agreement may be transferred (whether by way of security or otherwise) by either party without the prior written consent of the other party, except that:―
- 7(a) a party may make such a transfer of this Agreement pursuant to a consolidation or amalgamation with, or merger with or into, or transfer of all or substantially all its assets to, another entity (but without prejudice to any other right or remedy under this Agreement); and
- 7(b) a party may make such a transfer of all or any part of its interest in any Early Termination Amount payable to it by a Defaulting Party, together with any amounts payable on or with respect to that interest and any other rights associated with that interest pursuant to Sections 8, 9(h) and 11.
Any purported transfer that is not in compliance with this Section 7 will be void.
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No great difference between the versions of Section 7 other than those yielded by ISDA’s crack drafting squad™ satisfying its usual yen for redundancy and over-particularity.
Any right under any contract is subject to applicable law, after all, and converting “any amount payable on early termination under Section 6(e)” to “the Early Termination Amount together with any amounts payable under various other random clauses of the agreement as a result of its early termination” may be more exacting than the 1992 ISDA version, but you could as easily have fixed it just by deleting “under section 6(e)”.
Section 7 ought to head off the temptation felt, for example, by legal eagles who should come to be handling novations in years to come to insert laborious representations and warranties that neither party has assigned any of its obligations — but knowing the sorts of legal eagles who usually get assigned to such thrilling tasks, it won’t. Nor will the fact that the 2004 ISDA Novation Definitions includes that representation. Sigh.