Potential Event of Default - ISDA Provision
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Overview
See especially how the inclusion of Potential Event of Default makes the much talked-about, seldom understood Section 2(a)(iii) condition to payments far more sensitive than it has any right to be.
Summary
A Potential Event of Default is a Failure to Pay or Deliver, Breach of Agreement (or other Event of Default) with an unexpired grace period, or where the grace period has expired but the Non-defaulting Party hasn’t (yet) given a notice of default actually accelerating the default into an actual Event of Default.
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- The JC’s famous Nutshell™ summary of this clause
- Grace periods and notice requirements for each Event of Default - timing is everything
- Why no-one in their right mind would ever close out an ISDA for breach of agreement
- Grace periods and time being of the essence. Does this introduce a tension? Which gives
- Notice period convolution: beware of dirty pool from the negotiator community