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Not, strictly speaking, a [[guarantee]] at all, but a contractual obligation having a similar economic effect is the [[indemnity]]. Note the [[statute of frauds]] doesn’t apply to an [[indemnity]] - which is why it’s traditionally seen as a useful thing to attach to a guarantee.<br /> | Not, strictly speaking, a [[guarantee]] at all, but a contractual obligation having a similar economic effect is the [[indemnity]]. Note the [[statute of frauds]] doesn’t apply to an [[indemnity]] - which is why it’s traditionally seen as a useful thing to attach to a guarantee.<br /> | ||
===Negotiation points=== | ===Negotiation points=== | ||
'''[[Assignment]] of a [[Guarantor]]’s rights'''<br> | |||
A Guarantor has certain rights it acquires at law, even where it executes as a deed (such as the right of subrogation), and there is a risk that a [[guarantor]] who assigns these rights might somehow mysteriously compromise a beneficiary’s rights under the guarantee. So, to be sure, limit that right of assignment. | A Guarantor has certain rights it acquires at law, even where it executes as a deed (such as the right of subrogation), and there is a risk that a [[guarantor]] who assigns these rights might somehow mysteriously compromise a beneficiary’s rights under the guarantee. So, to be sure, limit that right of assignment. | ||
'''Parental [[guarantee]]s under the {{isdama}}'''<br> | |||
{{isdaguaranteewarning}} | {{isdaguaranteewarning}} | ||
'''The perils of unilateral termination rights'''<br> | |||
A related point: be careful about allowing the [[guarantor]] a termination right, even if amounts owing before termination are meant to remain [[guarantee|guaranteed]]. For a [[mark-to- market]] exposure under a [[master agreement]], whither the guaranteed obligation ? The [[mark-to-market]] exposure isn't, of itself, an obligation, at least not until until the contract has been closed out. Until then it is an emergent property of all the live [[transaction|transactions]] under the [[master agreement]]. Nor are those transactions "existing obligations" in whole: each will comprise future obligations, which may be contingent, and in any case are not yet due. | A related point: be careful about allowing the [[guarantor]] a termination right, even if amounts owing before termination are meant to remain [[guarantee|guaranteed]]. For a [[mark-to- market]] exposure under a [[master agreement]], whither the guaranteed obligation ? The [[mark-to-market]] exposure isn't, of itself, an obligation, at least not until until the contract has been closed out. Until then it is an emergent property of all the live [[transaction|transactions]] under the [[master agreement]]. Nor are those transactions "existing obligations" in whole: each will comprise future obligations, which may be contingent, and in any case are not yet due. | ||