Entire Agreement - ISDA Provision
2002 ISDA Master Agreement
Section 9(a) in a Nutshell™
Use at your own risk, campers!
Full text of Section 9(a)
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A lengthy disclaimer of any pre-contractual representations — presumably, not counting the ones patiently documented in Section 3) — is appended in the 2002 ISDA. You get the sense someone got burned in the ’90s, don’t you. Language that wounded has the air of wistful regret about it.
What you see is what you get, folks: if it ain’t written down in the ISDA Master Agreement, it don’t count, so no sneaky oral representations. But, anus matronae parvae malas leges faciunt, as we Latin freaks say: good luck in enforcing that if your counterparty is a little old lady.
Note also that liability for a fraudulent warranty or misrepresentation won’t be excluded. So if your oral representation or warranty is a bare-faced lie, the innocent party can maybe still rely on it in entering the agreement, even if it isn’t written down, though good luck parsing the universe of possible scenarios to figure out when that qualification might bite.
Smart-arse point: A warranty is a contractual assurance, made as part of a concluded contract, and cannot, logically, be relied on by the other party when entering into the contract. An assurance on which one relies when deciding to enter into a contract is a representation.
The entire agreement clause is legal boilerplate to nix any unwanted application of the parol evidence rule. Which might be a problem because the time-honoured understanding between all right-thinking derivatives trading folk is that the oral agreement, between the traders is the binding legal agreement, and not the subsequent confirmation, hammered out between middle office and operations folk after the trade is done. Hasten to Section 9(e)(ii) — the Confirmation is only evidence of the binding agreement. Could that be it?
Entire agreement bunk
Section 9(a) isn’t quite as ludicrous as the Entire Agreement clause in the 2010 GMSLA, in that ISDA’s crack drafting squad™ craftily included all Confirmations in the definition of “Agreement” in Section 1(c), but it is still mostly bunk, seeing as (as per the above) the Confirmation isn’t the canonical binding Transaction anyway, and besides an “Entire Agreement” that you freely concede the parties could be orally augmenting or Confirming several times a day for the hereafter really isn’t a fabulously stout hook to hang your hat on should you wish to make a point out of it in forthcoming litigation. Actually, what would be the point you would wish to make about an entire agreement in litigation? Answers on a postcard please.