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Commercial imperative: Difference between revisions
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===Dick moves=== | ===Dick moves=== | ||
Now, in the course of your relationship with your client, you may, if the fancy takes you, indulge in what | Now, in the course of your relationship with your client, you may, if the fancy takes you, indulge in what we might call “dick moves”.<ref>In fairness, your client might, too. Especially if it is a [[hedge fund]]. [[Hedge fund]]s are full of people who make dick moves, kind of as their business model.</ref> For example, you might seek to exploit the literal wording of a {{t|contract}} notwithstanding that you both know your commercial intention in entering it was something else. | ||
There are (at least) two kinds of dick moves: | There are (at least) two kinds of dick moves: | ||
*'''Mistrades''': those that arise from a misconception between the parties: your expectation and your client’s about the commercial intention were different. Cheapest to deliver options in credit derivatives are this kind of dick move. Your client sees a Triple A rating eligibility criteria, and sees in it impeachable credit. You look at it and see an opportunity to dump the crappiest, most poorly risked, implausibly rated Triple A bond that you can find.<ref>Once upon a time there were plenty. They all wound up in CDO<sup>3</sup> deals.</ref> | *'''Mistrades''': those that arise from a misconception between the parties: your expectation and your client’s about the commercial intention were different. Cheapest to deliver options in credit derivatives are this kind of dick move. Your client sees a Triple A rating eligibility criteria, and sees in it impeachable credit. You look at it and see an opportunity to dump the crappiest, most poorly risked, implausibly rated Triple A bond that you can find.<ref>Once upon a time there were plenty. They all wound up in CDO<sup>3</sup> deals.</ref> | ||
*''' | *'''“Tent-peg” mistrades''': A broker servicing its client is somewhat [[short an option]], too, and as a consequence will tend to write in ''ostensibly'' outrageous legal protections into its legal contracts by way of defensive strategy. | ||
===Legal risk=== | ===Legal risk=== | ||
At the start of your relationship, the value of the three types of X will be unknown. It is at this point that you, your counterparty, and your respective battalions of [[lawyers]] will engage in that unedifying ritual known as contract [[negotiation]]. Counsel will agonise four weeks on the potential import of the legal terms. “Does ''[[under]]'' really mean the same thing as ''[[In accordance with|pursuant to and in accordance with]]''?” This kind of thing. Most of the arguments will concern circumstances which are almost certain never to occur and, if they do, Will necessarily be utterly destructive of Future X in any case. The [[insolvency]] of the parties, for example. It is all very tedious, but those of a certain disposition seem to enjoy it. We write about them a lot on this site. | At the start of your relationship, the value of the three types of X will be unknown. It is at this point that you, your counterparty, and your respective battalions of [[lawyers]] will engage in that unedifying ritual known as contract [[negotiation]]. Counsel will agonise four weeks on the potential import of the legal terms. “Does ''[[under]]'' really mean the same thing as ''[[In accordance with|pursuant to and in accordance with]]''?” This kind of thing. Most of the arguments will concern circumstances which are almost certain never to occur and, if they do, Will necessarily be utterly destructive of Future X in any case. The [[insolvency]] of the parties, for example. It is all very tedious, but those of a certain disposition seem to enjoy it. We write about them a lot on this site. | ||