Counterparts and Confirmations - ISDA Provision: Difference between revisions

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 ===Section {{isdaprov|9(e)(ii)}} {{isdaprov|Confirmation}}s''' ===
 If a swap trader agrees one thing, and the {{isdaprov|Confirmation}} the parties subsequently sign says another, which gives? A 15 second dealing-floor exchange on a crackly taped line, or the carefully-wrought ten page, counterpart-executed legal {{isdaprov|Confirmation}} that follows it?
+{{trade versus confirmation}}
-'''TL;DR''': The original oral trade prevails.
-The prime thing to notice here is that the {{isdaprov|Confirmation}} is evidence of the {{isdaprov|Transaction}}, ''but it does not override the original {{isdaprov|Transaction}} terms, if they are different''.
-That is, the binding trade may be a phone call or a bloomberg chat. (This sits kind of uneasily with that {{isdaprov|Entire Agreement}} clause, but still.)
-If there is a dispute about the terms of your {{isdaprov|Confirmation}}, you are going to have to pull the tapes.
-There are some very good reasons for this. Firstly, the original trade was done by the trader with the trading mandate. The confirmation will be punted out by some dude in [[Operations|ops]] who might not be able to read the trader’s handwriting. Ops can and will get things wrong. That is correctable on the record. The trader doesn't “get things wrong”. If she does, you're into [[mistake]] territory. The law on [[contractual mistake]]s is beloved by students of the law and misunderstood by everyone else. But generally, if the trader erroneously executes a trade, and the trader’s counterparty understands it correctly, the trader, and the firm she works for, will be bound by the error. That's not a [[contractual mistake]]. It's just a bad trade.
-By contrast, a settlements and reconciliations dude who sends out a confirm which carelessly misinterprets the trade log is not making a contractual mistake: he is ''incorrectly recording the contract''. That wasn't the trade (good or bad) that the trader did.
-Similarly, the reconciliations dude who sends out a confirm ''which corrects an error made by the trader'' has no mandate to make that change. The error is the trader’s. The trader should live with it, and throw herself at the mercy of the jurisprudence of [[contractual mistake]]s if need be: it is not for said reconciliations dude to pull her out of a hole.
 Note also the addition of [[e-mail]] as a means of communication to the 2002 version (email not really having been a “thing” in 1992). This caused all kinds of [[fear and loathing]] amongst the judiciary, when asked about it, as can be seen in the frightful case of {{casenote|Greenclose|National Westminster Bank plc}}.Oh dear, oh dear, oh dear.