No event of default or potential event of default: Difference between revisions

Jump to navigation Jump to search

No event of default or potential event of default (view source)

Revision as of 09:02, 3 July 2019

23 bytes added ,  3 July 2019
no edit summary
No edit summary
No edit summary
Line 2: Line 2:
Can you understand the rationale for this representation: Sure. Does it make any practical sense? It does not. A [[No event of default or potential event of default - Representation|No EOD rep]] is a classic [[loo paper rep]]: soft, durable, comfy, absorbent — super cute when a wee Labrador pub grabs one end of the streamer and charges round your Italian sunken garden with it — but as a [[credit mitigant]] or a genuine contractual protection, only good for wiping your behind on.
Can you understand the rationale for this representation: Sure. Does it make any practical sense? It does not. A [[No event of default or potential event of default - Representation|No EOD rep]] is a classic [[loo paper rep]]: soft, durable, comfy, absorbent — super cute when a wee Labrador pub grabs one end of the streamer and charges round your Italian sunken garden with it — but as a [[credit mitigant]] or a genuine contractual protection, only good for wiping your behind on.


Beaqr in mind you are asking someone — on pain of them being found in [[Fundamental breach|fundamental breach of contract]] — to swear to you they are not already in [[fundamental breach]] of {{t|contract}}. Now, how much comfort can you genuinely draw from such promise? Wouldn't it be better if your [[credit]] team did some cursory [[due diligence]] to establish whether there are any grounds to suppose your counterparty might be in [[fundamental breach]] of {{t|contract}}?  
Bear in mind you are asking someone — on pain of them being found in [[Fundamental breach|fundamental breach of contract]] — to swear to you they are not already in [[fundamental breach]] of {{t|contract}}. Now, how much comfort can you genuinely draw from such promise? Wouldn't it be better if your [[credit]] team did some cursory [[due diligence]] to establish, independently of the say-so of the prisoner in question, whether there are grounds to suppose it might be in [[fundamental breach]] of {{t|contract}}?  


Presuming that no such information is available — folks tend not to publicise their own defaults on private contracts, after all — the real question here is “Should I trust my counterparty?” And to that question, any answer provided by exactly the person whose trustworthiness your enquiry is designed to test, carries exactly no informational value.
Presuming there are not — folks tend not to publicise their own defaults on private {{t|contract}}s, after all — the real question here is, “do I trust my counterparty?” And to that question, any answer provided by the person whose trustworthiness is in question, carries exactly no informational value. All cretins are liars.<ref>I know, I know.</ref>


So let’s say it turns out your counterparty ''was'' lying; there was an extant or pending private [[event of default]] that it knew about and you didn’t. Now what are you going to do? Righteously detonate your contract on account of something of which ''by definition you are ignorant''?
So, let’s say it turns out your counterparty ''is'' lying; there is a pending private [[event of default]] it knew about and you didn’t. Now what are you going to do? Righteously detonate your contract on account of something of which ''by definition you are ignorant''?


Have fun, counselor.
Have fun, counselor.
Retrieved from "https://jollycontrarian.com/index.php?title=Special:MobileDiff/31535"

Navigation menu