Non-Contractual Currency - ISDA Provision

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ISDA Anatomy

incorporating our exclusive ISDA in a Nutshell™

In a Nutshell Section 8(a):

8(a) Payment in the Contractual Currency: Each payment under this Agreement must be made in the currency specified for that payment (the “Contractual Currency”). Payments made in a Non-Contractual Currency will only discharge an obligation to the extent the recipient, having converted it into the Contractual Currency in good faith using commercially reasonable procedures, achieves the full amount payable in the Contractual Currency.

(i) If the converted amount falls short of the amount payable in the Contractual Currency, the payer must immediately pay the necessary balance in the Contractual Currency.
(ii) If the converted amount exceeds the full amount payable in the Contractual Currency, the payee must promptly refund the excess.

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2002 ISDA full text of Section 8(a):

8(a) Payment in the Contractual Currency. Each payment under this Agreement will be made in the relevant currency specified in this Agreement for that payment (the “Contractual Currency”). To the extent permitted by applicable law, any obligation to make payments under this Agreement in the Contractual Currency will not be discharged or satisfied by any tender in any currency other than the Contractual Currency, except to the extent such tender results in the actual receipt by the party to which payment is owed, acting in good faith and using commercially reasonable procedures in converting the currency so tendered into the Contractual Currency, of the full amount in the Contractual Currency of all amounts payable in respect of this Agreement. If for any reason the amount in the Contractual Currency so received falls short of the amount in the Contractual Currency payable in respect of this Agreement, the party required to make the payment will, to the extent permitted by applicable law, immediately pay such additional amount in the Contractual Currency as may be necessary to compensate for the shortfall. If for any reason the amount in the Contractual Currency so received exceeds the amount in the Contractual Currency payable in respect of this Agreement, the party receiving the payment will refund promptly the amount of such excess.
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Click here for the text of Section 8(a) in the 1992 ISDA


Resources Wikitext | Nutshell wikitext | 1992 ISDA wikitext | 2002 vs 1992 Showdown | 2006 ISDA Definitions | 2008 ISDA | JC’s ISDA code project
Navigation Preamble | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13 | 14
Events of Default: 5(a)(i) Failure to Pay or Deliver5(a)(ii) Breach of Agreement5(a)(iii) Credit Support Default5(a)(iv) Misrepresentation5(a)(v) Default Under Specified Transaction5(a)(vi) Cross Default5(a)(vii) Bankruptcy5(a)(viii) Merger without Assumption
Termination Events: 5(b)(i) Illegality5(b)(ii) Force Majeure Event5(b)(iii) Tax Event5(b)(iv) Tax Event Upon Merger5(b)(v) Credit Event Upon Merger5(b)(vi) Additional Termination Event

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An ISDA heresy made up by the JC to make his Nutshell ISDA easier to read. It means, in ISDA-speak, “a currency other than the Contractual Currency”. But I bet you figured that out for yourself.


See also