Entire agreement - GMSLA Provision
2010 Global Master Securities Lending Agreement
Clause 27.1 in a Nutshell™
Use at your own risk, campers!
Full text of Clause 27.1
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What of the unfortunate phrase, “all oral communication and prior writings with respect thereto”. Is this meant to nix previous written communications, but not subsequent ones, but all oral communications, past present and future? Who can say? But as we argue in our impassioned essay below, it doesn’t make much difference. This is a silly clause however you look at it.
Entire agreement bunk
An entire agreement clause that illustrates the vacuity of entire agreement clauses. The written form of the executed master agreement contemplates that it is but a framework — the architectural underpinnings that make possible a later, greater agreement that is yet to come — an exoskeleton to be dressed, decorated and adorned later by subsequently, separately recorded agreements that are not even subordinate to it, but supervene it in every respect by which they differ. The 2010 GMSLA is absolutely not an “entire agreement”. Not even retrospectively.
For parties with no prior history of stock loan trading, a freshly executed 2010 GMSLA, with its schedule, may be the “entire agreement” between them for that brief period of gestation between its execution and the first transaction they print under it: then really would be no other agreements between them, but for that exact reason in that window their 2010 GMSLA would be in a kind of locked-in, vegetative state in which none of its carefully-negotiated terms do anything: no deliveries fall to be made, no income is to be manfasctured, no collateral to be given, returned or even marked to market: until animated the 2010 GMSLA is a cadaver, on the slab, awaiting the storm and its first pulse of invigorating lightning.
Ahh, but it is meant retrospectively, we hear the legal eagle cry. Leaving aside that that’s not quite how ICMA’s crack drafting squad™ rendered it — call that a drafting slip — even that contention fails on close examination: for virgin stock lenders it really ought to go without saying; for those upgrading existing stock lending master agreements — 1995 OSLAs and so forth — then their new 2010 GMSLA inherits and adopts every open Loan between them. What are these legacy Loans if not separate agreements on the same subject matter as the new 2010 GMSLA?
The JC can see a waise legal eagle holding up an index finger and intoning: “Ah, but, you see, the executed 2010 GMSLA contemplates transactions under it, so those Loans, past and future, are deemed part of the entire agreement. Thus, indeed the 2010 GMSLA, in this wider sense, is the entire agreement.”
To you, sir or madam, I say trouble me not with such piffle. What you are thereby contesting is that “this written agreement, as previously or subsequently appended, amended, transacted or redacted, is the entire agreement”. If that’s what you mean, well — thanks for writing in, counsellor.