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Eligible Contract Participant: Difference between revisions
Eligible Contract Participant (view source)
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:(iii) that have a net worth exceeding $1 million and enter into the contract in connection with their business or to manage the risk associated with an asset or liability owned or incurred or reasonably likely to be owned or incurred in the conduct of their business. | :(iii) that have a net worth exceeding $1 million and enter into the contract in connection with their business or to manage the risk associated with an asset or liability owned or incurred or reasonably likely to be owned or incurred in the conduct of their business. | ||
==Enforceability: the | ==Enforceability: the “ECP Rep"== | ||
Under the [[Commodity Futures Modernization Act of 2000]], a commodity contract entered between Eligible Contract Participant or persons reasonably believed to be ECPs will be deemed enforceable. Therefore a representation to that effect in a commodity contract is advisable. the following text is recommended by [[Sullivan & Cromwell]]: | Under the [[Commodity Futures Modernization Act of 2000]], a commodity contract entered between Eligible Contract Participant or persons reasonably believed to be ECPs will be deemed enforceable. Therefore a representation to that effect in a commodity contract is advisable. the following text is recommended by [[Sullivan & Cromwell]]: | ||
Each Party represents and warrants to the other Party that: | Each Party represents and warrants to the other Party that: | ||
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7 U.S.C. § 1 (a) (11).] | 7 U.S.C. § 1 (a) (11).] | ||
(Note that the second limb here isn't strictly necessary for the ECP rep; this is indeed the | (Note that the second limb here isn't strictly necessary for the ECP rep; this is indeed the “ECE rep", about which you can read to your heart's content [[eligible commercial entity|here]].) | ||
==The Alternative | ==The Alternative “Factual Rep"== | ||
Every now and then you come across a counterparty in some far-flung backwater (continental Europe, for example) who expresses bafflement or even affrontery at the thought of subjugating itself to the law of the Americans. That this might happen takes some Americans by surprise. Then again, that it takes Americans by surprise takes everyone else by surprise. No matter: there is a sensible compromise. Simply have that counterparty give a rep to the factual content of the ECP rep. For example: | Every now and then you come across a counterparty in some far-flung backwater (continental Europe, for example) who expresses bafflement or even affrontery at the thought of subjugating itself to the law of the Americans. That this might happen takes some Americans by surprise. Then again, that it takes Americans by surprise takes everyone else by surprise. No matter: there is a sensible compromise. Simply have that counterparty give a rep to the factual content of the ECP rep. For example: | ||