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Illegality - ISDA Provision: Difference between revisions
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{{fullanat2|isda|5(b)(i)|2002|5(b)(i)|1992}} | |||
{{isdacomparison}} | {{isdacomparison}} | ||
==1992 User Guide== | ==1992 User Guide== | ||
Section 5(b)(i) provides that a {{isdaprov|Termination Event}} will occur if it becomes unlawful for a party to make a payment or delivery or receive a payment or delivery or comply with any material provision of a 1992 Agreement or it becomes unlawful for a party or a {{isdaprov|Credit Support Provider}} to perform under a Credit Support Document. The party in respect of which the Illegality has occurred will be the Affected Party. This Termination Event excludes any event which results from a breach by a party of the agreement in Section 4(b) to maintain authorizations necessary in connection with a 1992 Agreement or any Credit Support Document. Any such breach thus will be treated as an Event of Default and not an Illegality. | Section 5(b)(i) provides that a {{isdaprov|Termination Event}} will occur if it becomes unlawful for a party to make a payment or delivery or receive a payment or delivery or comply with any material provision of a 1992 Agreement or it becomes unlawful for a party or a {{isdaprov|Credit Support Provider}} to perform under a Credit Support Document. The party in respect of which the Illegality has occurred will be the Affected Party. This Termination Event excludes any event which results from a breach by a party of the agreement in Section 4(b) to maintain authorizations necessary in connection with a 1992 Agreement or any Credit Support Document. Any such breach thus will be treated as an Event of Default and not an Illegality. | ||
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==Illegality vs. Force Majeure== | ==Illegality vs. Force Majeure== | ||
Note that under the 2002, {{isdaprov|Illegality}} trumps {{isdaprov|Force Majeure}}. Given that Illegality is no longer subject to the "two Affected Parties" delay on termination (as it was in the {{1992ma}}, this is significant. | Note that under the 2002, {{isdaprov|Illegality}} trumps {{isdaprov|Force Majeure}}. Given that Illegality is no longer subject to the "two Affected Parties" delay on termination (as it was in the {{1992ma}}, this is significant. | ||
{{seealso}} | |||
{{ | *{{isdaprov|Transaction}} | ||
*{{isdaprov|Affected Party}} | |||
*{{isdaprov|Credit Support Provider}} | |||
*{{isdaprov|Credit Support Document}} | |||