Entire Agreement - ISDA Provision

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2002 ISDA Master Agreement
A Jolly Contrarian owner’s manual

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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 ᐅ to expand:

Section 9(a) in a Nutshell
Use at your own risk, campers!

9(a) Entire Agreement. This Agreement is the entire agreement between the parties on its subject matter. Neither party has relied on any representation (except the actual Representations) when entering into it and each party therefore waives all rights it might otherwise have to claim it has. That said, nothing will limit either party’s liability for fraud.
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Full text of Section 9(a)

9(a) Entire Agreement. This Agreement constitutes the entire agreement and understanding of the parties with respect to its subject matter. Each of the parties acknowledges that in entering into this Agreement it has not relied on any oral or written representation, warranty or other assurance (except as provided for or referred to in this Agreement) and waives all rights and remedies which might otherwise be available to it in respect thereof, except that nothing in this Agreement will limit or exclude any liability of a party for fraud.
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Related agreements and comparisons

Related Agreements
Click here for the text of Section 9(a) in the 1992 ISDA
Comparisons
Click to compare this section in the 1992 ISDA and 2002 ISDA.

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Content and comparisons

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.
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Summary

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.

Confirmations

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,[1] 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.
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See also

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References

  1. Students of the absurd may enjoy our essay on that topic, here.