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Grace period: Difference between revisions
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}}A [[grace period]] — being the difference between an [[event of default]] and a [[potential event of default]] — is the sort of thing that is liable to give a [[credit officer]] hot flushes. Given away years before, in a weak moment during a sterile {{t|negotiation}}, when the sap finally rises and our [[Credit officer|credit fellow]] is fumbling in his trousers for his termination triggers, it will flare up and spoil the moment. | }}A [[grace period]] — being the difference between an [[event of default]] and a [[potential event of default]] — is the sort of thing that is liable to give a [[credit officer]] hot flushes. Given away years before, in a weak moment during a sterile {{t|negotiation}}, when the sap finally rises and our [[Credit officer|credit fellow]] is fumbling in his trousers for his termination triggers, it will flare up and spoil the moment. | ||
[[Grace period]]s are usually found in buried into [[failure to pay]] or [[bankruptcy]] [[events of default]]. Your counterparty has [[Failure to pay|failed to pay]] on a due date, or a petition has been presented, but the {{t|contract}} stipulates the counterparty has a period to cure its failure or discharge the petition. Until that period has elapsed you must keep your agitated [[credit officer]] under a cold shower. Until then, you have a [[potential event of default]] — a sort of murky netherworld of counterparty turpitude where oxygen is in short supply, skies darken and debtors start to go blue — and this might afford you some comfort (under [[representations]] and [[warranties]]) but it won’t ''yet'' permit your [[credit]] guy to pull his, ah, trigger. | [[Grace period]]s are usually found in buried into [[failure to pay]] or [[bankruptcy]] [[events of default]] — or, stealthily, in the ''notices'' clause (see below). Your counterparty has [[Failure to pay|failed to pay]] on a due date, or a petition has been presented, but the {{t|contract}} stipulates the counterparty has a period to cure its failure or discharge the petition. Until that period has elapsed you must keep your agitated [[credit officer]] under a cold shower. Until then, you have a [[potential event of default]] — a sort of murky netherworld of counterparty turpitude where oxygen is in short supply, skies darken and debtors start to go blue — and this might afford you some comfort (under [[representations]] and [[warranties]]) but it won’t ''yet'' permit your [[credit]] guy to pull his, ah, trigger. | ||
{{Grace periods and time of essence}} | {{Grace periods and time of essence}} | ||
===Backdoor [[grace period]]s ... in the ''notices'' | ===Backdoor [[grace period]]s ... in the ''notices'' clause=== | ||
{{Notices complexity option}} | {{Notices complexity option}} | ||
{{sa}} | {{sa}} | ||
*{{isdaprov|Failure to pay}} and {{isdaprov|Bankruptcy}} under the {{isdama}} | *{{isdaprov|Failure to pay}} and {{isdaprov|Bankruptcy}} under the {{isdama}} | ||
{{ref}} | {{ref}} | ||