82,891
edits
Guarantee: Difference between revisions
no edit summary
Amwelladmin (talk | contribs) No edit summary |
Amwelladmin (talk | contribs) No edit summary |
||
| Line 14: | Line 14: | ||
====[[Assignment]] of a [[Guarantor]]’s rights==== | ====[[Assignment]] of a [[Guarantor]]’s rights==== | ||
A Guarantor has certain rights it acquires at law, even where it executes as a deed (such as the right of subrogation), and there is a risk that a [[guarantor]] who assigns these rights might somehow mysteriously compromise a beneficiary’s rights under the guarantee. So, to be sure, limit that right of assignment. | A Guarantor has certain rights it acquires at law, even where it executes as a deed (such as the right of subrogation), and there is a risk that a [[guarantor]] who assigns these rights might somehow mysteriously compromise a beneficiary’s rights under the guarantee. So, to be sure, limit that right of assignment. | ||
=== | ===Parental [[guarantee]]s under the {{isdama}}=== | ||
{{isdaguaranteewarning}} | {{isdaguaranteewarning}} | ||
====Termination rights==== | |||
A related point: be careful about allowing the [[guarantor]] a termination right, even if amounts owing before termination are meant to remain [[guarantee|guaranteed]]. For a [[mark-to- market]] exposure under a [[master agreement]], whither the guaranteed obligation ? The [[mark-to-market]] exposure isn't, of itself, an obligation, at least not until until the contract has been closed out. Until then it is an emergent property of all the live [[transaction|transactions]] under the [[master agreement]]. Nor are those transactions "existing obligations" in whole: each will comprise future obligations, which may be contingent, and in any case are not yet due. | |||
Consider providing for a lengthy notice period in such a termination period, which allows the [[beneficiary]] to adjust [[initial margin]] and precipitate a [[failure to pay]] (or rebase its [[credit support]] into tangible [[collateral]]). Alternatively make the termination of the [[master agreement]] a [[condition precedent]] to terminating the [[guarantee]]. | |||
{{seealso}} | {{seealso}} | ||
*{{isdaprov|Credit Support Document}} | *{{isdaprov|Credit Support Document}} | ||