Inability of Head or Home Office to Perform Obligations of Branch - ISDA Provision

2002 ISDA Master Agreement A Jolly Contrarian owner’s manual™ Resources and navigation [[{{{1}}} - 1992 ISDA Provision|This provision in the 1992]] Resources Wikitext | Nutshell wikitext | 1992 ISDA wikitext | 2002 vs 1992 Showdown | 2006 ISDA Definitions | 2008 ISDA | JC’s ISDA code project Navigation Preamble | 1 • (a) (b) (c) | 2 • (a) (b) (c) (d) | 3 • (a) (b) (c) (d) (e) (f) (g) | 4 • (a) (b) (c) (d) (e) | 5 • 5(a) Events of Default: 5(a)(i) Failure to Pay or Deliver 5(a)(ii) Breach of Agreement 5(a)(iii) Credit Support Default 5(a)(iv) Misrepresentation 5(a)(v) Default Under Specified Transaction 5(a)(vi) Cross Default 5(a)(vii) Bankruptcy 5(a)(viii) Merger Without Assumption 5(b) Termination Events: 5(b)(i) Illegality 5(b)(ii) Force Majeure Event 5(b)(iii) Tax Event 5(b)(iv) Tax Event Upon Merger 5(b)(v) Credit Event Upon Merger 5(b)(vi) Additional Termination Event (c) (d) (e) | 6 • (a) (b) (c) (d) (e) (f) | 7 | 8 • (a) (b) (c) (d) | 9 • (a) (b) (c) (d) (e) (f) (g) (h) | 10 | 11 | 12 • (a) (b) | 13 • (a) (b) (c) (d) | 14 | Index: Click ᐅ to expand: 2002 ISDA 1992 ISDA Section 5(e) in a Nutshell™ Use at your own risk, campers! 5(e) Head office unable to perform branch’s obligations. If: (i) an Illegality or a Force Majeure occurs a branch of an Affected Party other than its head office; AND (ii) it has representated that its head office will be liable for all branch obligations (per Section 10(a)); AND (iii) the Non-Affected Party asks the Affected Party to perform through its head office; AND (iv) the Affected Party cannot perform because its head office would also be subject to an Illegality or a Force Majeure if tried to do so, then as long as that situation prevails, that failure will not count as a Failure to Pay or Credit Support Default for the Affected Party. view template Full text of Section 5(e) 5(e) Inability of Head or Home Office to Perform Obligations of Branch. If: (i) an Illegality or a Force Majeure Event occurs under Section 5(b)(i)(1) or 5(b)(ii)(1) and the relevant Office is not the Affected Party’s head or home office, (ii) Section 10(a) applies, (iii) the other party seeks performance of the relevant obligation or compliance with the relevant provision by the Affected Party’s head or home office and (iv) the Affected Party’s head or home office fails so to perform or comply due to the occurrence of an event or circumstance which would, if that head or home office were the Office through which the Affected Party makes and receives payments and deliveries with respect to the relevant Transaction, constitute or give rise to an Illegality or a Force Majeure Event, and such failure would otherwise constitute an Event of Default under Section 5(a)(i) or 5(a)(iii)(1) with respect to such party, then, for so long as the relevant event or circumstance continues to exist with respect to both the Office referred to in Section 5(b)(i)(1) or 5(b)(ii)(1), as the case may be, and the Affected Party’s head or home office, such failure will not constitute an Event of Default under Section 5(a)(i) or 5(a)(iii)(1). view template Related agreements and comparisons Click here for the text of Section 5(e) in the 1992 ISDA Nothing to see here, folks. Comments? Questions? Suggestions? Requests? Insults? We’d love to 📧 hear from you. Sign up for our newsletter.

Content and comparisons

There is no Section 5(e) in the 1992 ISDA. It came about through a confluence of the 2002 ISDA’s new Force Majeure Termination Event, an evolution of the existing Illegality Termination Event, and what we can only put down to down-home crazy-apes paranoia from ISDA’s crack drafting squad™, about which we hypothesise in some detail in the premium section. Our imagined explanation involves Pink Floyd axe-man David Gilmour and some disrupted Moroccan Dirham remittances, if that is any incentive.

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Summary

In a nutshell squared: If an Affected Party’s head office is subject to a Force Majeure or Illegality, It can’t be whacked for not performing a branch’s obligations under the Section 10(a) rep.

From the “shoot me” department, this multi-line bunker-buster introduced into the 2002 ISDA which, to give it some kind of credit, doesn’t generate a great deal of comment in the course of your average negotiation. That is as likely to be because it is so stupefyingly dull that no one has summoned the fortitude to read it as it is because it is a sensible, prudent allocation of risk.

But here you are, especially for you, the Jolly Contrarian’s Nutshell™ service renders it for you in emperor’s couturier style.

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General discussion

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See also

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References

In a nutshell squared: If an Affected Party’s head office is subject to a Force Majeure or Illegality, It can’t be whacked for not performing a branch’s obligations under the Section 10(a) rep.

From the “shoot me” department, this multi-line bunker-buster introduced into the 2002 ISDA which, to give it some kind of credit, doesn’t generate a great deal of comment in the course of your average negotiation. That is as likely to be because it is so stupefyingly dull that no one has summoned the fortitude to read it as it is because it is a sensible, prudent allocation of risk.

But here you are, specially for you, the Jolly Contrarian’s Nutshell™ service renders it for you in emperor’s couturier style:

See also

I’m sorry I asked