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===[[Consideration]]=== | ===[[Consideration]]=== | ||
The [[consideration]] given for terminating one contract and creating the other are related: In effect, there will be a [[MTM]] value payable to or from the [[transferor]] under the first, and an equal payment to or from the [[remaining party]] under the second, so [[transferor]] and [[transferee]] settle these payments directly between each other. [[Remaining party]]’s obligation to discharge [[transferor]] of its liabilities under the terminating {{t|contract}} is conditional on [[transferee]]’s agreement to accept the identical liabilities under the new [[contract]]. | The [[consideration]] given for terminating one contract and creating the other are related: In effect, there will be a [[MTM]] value payable to or from the [[transferor]] under the first, and an equal payment to or from the [[remaining party]] under the second, so [[transferor]] and [[transferee]] settle these payments directly between each other. [[Remaining party]]’s obligation to discharge [[transferor]] of its liabilities under the terminating {{t|contract}} is conditional on [[transferee]]’s agreement to accept the identical liabilities under the new [[contract]]. | ||
===Trick for young players=== | |||
This is where one where unless you are careful, you may need to rely, more heavily that you would like, on the [[legal eagle]]’s old friend [[mutatis mutandis]]. | |||
Many [[service contract|service contracts]] allow service-providing parties to [[delegate]], [[sub-contract]] or otherwise [[Outsourcing|outsource]] the substantive meat and drink of what they have promised to do for their clients (alas — such is the obsession of our mildewed times, with [[rentier]] behaviour). Now that is all well and good, but the client’s [[legal eagle|juridical birds of prey]], bridling at what they (rightly) see as an inclination towards outright dereliction of duty, will insist some limits on this right to subcontract. You may only sub-contract, they will say, to your own [[affiliate|affiliates]]. | |||
When it comes to novations, it might make a difference how you ''describe'' those affiliates. If you say, “affiliates of the Custodian”, and the Custodian then sells its custody book to Wickliffe Hampton Securities Limited, | |||
{{sa}} | {{sa}} | ||
*[[ISDA Novation Anatomy]] | *[[ISDA Novation Anatomy]] | ||