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Finance contract: Difference between revisions
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The classic finance contract is a [[loan]]. I lend you a large sum of money; you pay me interest, and eventually pay it back. In the mean time I am constantly beset by daemons, plagues, dread terrors and so on, fantastical threnodies all on the single worry that ''you never pay me back''. | The classic finance contract is a [[loan]]. I lend you a large sum of money; you pay me interest, and eventually pay it back. In the mean time I am constantly beset by daemons, plagues, dread terrors and so on, fantastical threnodies all on the single worry that ''you never pay me back''. | ||
Other good examples are [[swap]]s, futures, [[securities]], [[Securities financing transaction|securities financing arrangements]], [[option]]s, trade financing arrangements, securitisations and commodity supply contracts. Extra points for excitement if they [[cross-border|cross borders]] or constitute, as they often will, regulated activity of some kind. | Other good examples are [[swap]]s, futures, [[securities]], [[Securities financing transaction|securities financing arrangements]], [[option]]s, trade financing arrangements, securitisations and commodity supply contracts, and assurances offered to support others’ obligations under loans, like [[guarantee]]s. Extra points for excitement if they [[cross-border|cross borders]] or constitute, as they often will, regulated activity of some kind. | ||
Finance contracts create special, ''large'', monetary risks. These are different in quality and nature than risks presented by other contracts. You may — in fact, almost certainly will — feel a deep resentment and disappointment at those you engage to carry out your loft extension, as the fourteenth month passes of a project you were assured would take six weeks, but the answer is just to not pay | Finance contracts create special, ''large'', monetary risks. These are different in quality and nature than risks presented by other contracts. You may — in fact, almost certainly will — feel a deep resentment and disappointment at those you engage to carry out your loft extension, as the fourteenth month passes of a project you were assured would take six weeks, but the answer is just to not pay for things they haven’t done, or have done half-heartedly, or have bished up. these things may well exasperate you, mightily, but they aren’t ''that'' likely to send you to the brink of ruin, and — trust me — ''however'' dismal your contractors may be, suing them will be worse, and “self-help” isn’t really an option. If it was, no-one would hire builders in the first place. Wouldn’t that be a beautiful world. | ||
But enough about the JC’s forlorn endeavours with home improvement. When your business is handing over large quantities of liquid assets to people you don’t know well, in the expectation of they will return them later, things can quickly, and effortlessly, ''badly'' go wrong. Therefore, finance contracts have lots and lots of [[boilerplate]] aimed to keep those who are owed money-like things safe. | But enough about the JC’s forlorn endeavours with home improvement. When your business is handing over large quantities of liquid assets to people you don’t know well, in the expectation of they will return them later, things can quickly, and effortlessly, ''badly'' go wrong. Therefore, finance contracts have lots and lots of [[boilerplate]] aimed to keep those who are owed money-like things safe. | ||