Force Majeure Event - ISDA Provision: Difference between revisions

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Force Majeure Event - ISDA Provision (view source)

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{{newisdamanual|Force Majeure}}
 
==Section {{isdaprov|5(b)(ii)}} {{2002ma}}==
{{isdaquote|{{isdaprov|5(b)(ii)}} {{isdaprov|Force Majeure Event}}. After giving effect to any applicable provision, disruption fallback or remedy specified in, or <br>pursuant to, the relevant Confirmation or elsewhere in this {{isdaprov|Agreement}}, by reason of [[force majeure]] or act of state occurring <br>after a {{isdaprov|Transaction}} is entered into, on any day:― <br>
:(1) the {{isdaprov|Office}} through which such party (which will be the {{isdaprov|Affected Party}}) makes and receives payments or deliveries with <br>respect to such {{isdaprov|Transaction}} is prevented from performing any absolute or contingent obligation to make a payment or delivery <br>in respect of such Transaction, from receiving a payment or delivery in respect of such {{isdaprov|Transaction}} or from complying with <br>any other material provision of this {{isdaprov|Agreement}} relating to such {{isdaprov|Transaction}} (or would be so prevented if such payment, <br>delivery or compliance were required on that day), or it becomes impossible or impracticable for such {{isdaprov|Office}} so to perform, <br>receive or comply (or it would be impossible or impracticable for such {{isdaprov|Office}} so to perform, receive or comply if such <br>payment, delivery or compliance were required on that day); or <br>
:(2) such party or any {{isdaprov|Credit Support Provider}} of such party (which will be the {{isdaprov|Affected Party}}) is prevented from performing <br>any absolute or contingent obligation to make a payment or delivery which such party or {{isdaprov|Credit Support Provider}} has under <br>any {{isdaprov|Credit Support Document}} relating to such {{isdaprov|Transaction}}, from receiving a payment or delivery under such Credit Support <br>Document or from complying with any other material provision of such {{isdaprov|Credit Support Document}} (or would be so prevented if <br>such payment, delivery or compliance were required on that day), or it becomes impossible or impracticable for such party or <br>{{isdaprov|Credit Support Provider}} so to perform, receive or comply (or it would be impossible or impracticable for such party or <br>{{isdaprov|Credit Support Provider}} so to perform, receive or comply if such payment, delivery or compliance were required on that day), <br>
so long as the force majeure or act of state is beyond the control of such Office, such party or such Credit Support <br>Provider, as appropriate, and such {{isdaprov|Office}}, party or {{isdaprov|Credit Support Provider}} could not, after using all reasonable efforts <br>(which will not require such party or {{isdaprov|Credit Support Provider}} to incur a loss, other than immaterial, incidental expenses), <br>overcome such prevention, impossibility or impracticability;|5(b)(ii)|2002}}
 
There is no equivalent in the {{1992ma}}.
===Incorporating Force Majeure into the {{1992ma}}===
On the subject of incorporating Force Majeure into the 1992 Master:
 
No problem including the concept but it then has to be carried through to its logical conclusion i.e.:
*hierachy of events,
*impact re deferral of Early Termination Amount etc.
The concept also impacts basis of Close Out because the 2002 requires use of true mids for valuation i.e, not the mean of each party's view of the bid/offer where a force majeure event (or illegality) occurs, which is what you effectively get under the 1992 "two affected parties" option.
 
{{isdaanatomy}}
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