82,510
edits
Amwelladmin (talk | contribs) m (Amwelladmin moved page No event of default or potential event of default - Representation to No event of default or potential event of default) |
Amwelladmin (talk | contribs) No edit summary |
||
Line 1: | Line 1: | ||
{{repanat|No default or potential event of default|[[File:Andrex.jpg|450px|frameless|center]]}} | {{repanat|No default or potential event of default|[[File:Andrex.jpg|450px|frameless|center]]}}Can you understand the emotional rationale for this representation? Sure. Does it do any practical good? No. | ||
Can you understand the rationale for this representation? Sure. Does it do any practical good? | |||
No. | A [[No event of default or potential event of default - Representation|No EOD rep]] is a [[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 backside on. | ||
Bear in mind you are asking someone — on pain of them being found in [[Fundamental breach|fundamental breach of contract]] — to attest that 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 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 ''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''? | |||
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. |