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Event of default: Difference between revisions
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It might occur to us that, whether we agree to this or not, as a philosophical matter, she who breaks a contract is in no position to insist on her counterparty observing it. The jig is up; by refusing to pay, the agent has detonated our fundamental bargain; what we wrote on this paper is no longer a live covenant, but is only good for evaluating our loss of the bargain we struck. We can terminate in a funk and sue for damages, regardless of the contract. | It might occur to us that, whether we agree to this or not, as a philosophical matter, she who breaks a contract is in no position to insist on her counterparty observing it. The jig is up; by refusing to pay, the agent has detonated our fundamental bargain; what we wrote on this paper is no longer a live covenant, but is only good for evaluating our loss of the bargain we struck. We can terminate in a funk and sue for damages, regardless of the contract. | ||
The alternative is to say, well, we anticipated non-performance and provided for it in the contract. We set out special rules: that is what each agreed to, so that is what must happen. The rules are that you must provide the necessary notice, come what may. | The alternative is to say, well, we anticipated non-performance and provided for it in the contract. We set out special rules: that is what each agreed to, so that is what must happen. The rules are that you must provide the necessary notice, come what may. | ||
=====Deviation, fundamental breach and repudiation of contract | |||
===== Deviation, fundamental breach and repudiation of contract ===== | |||
There are no contracts precisely on point, but some come close. Lord Denning MR — yes, that Lord Denning — made a heroic attempt to build a common law doctrine of “fundamental breach” in the sixties and seventies, wherein if a party’s breach of contract was ''so'' fundamental it would automatically discharge the whole contract, taking with it any remaining terms. | There are no contracts precisely on point, but some come close. Lord Denning MR — yes, that Lord Denning — made a heroic attempt to build a common law doctrine of “fundamental breach” in the sixties and seventies, wherein if a party’s breach of contract was ''so'' fundamental it would automatically discharge the whole contract, taking with it any remaining terms. | ||
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====Under the [[master agreements|master trading agreements]]==== | ====Under the [[master agreements|master trading agreements]]==== | ||
There is specific idiosyncratic lore attaching to the events of default under differing market standard master agreements, so go with alacrity to: | There is specific idiosyncratic lore attaching to the events of default under differing market standard master agreements, so go with alacrity to: | ||
''{{isdama}}'': {{isdaprov|Event of Default}} <br> | ''{{isdama}}'': {{isdaprov|Event of Default}} <br> | ||
''{{gmsla}}'': {{gmslaprov|Event of Default}} <br> | ''{{gmsla}}'': {{gmslaprov|Event of Default}} <br> | ||
''{{gmra}}'': {{gmraprov|Event of Default}} | ''{{gmra}}'': {{gmraprov|Event of Default}} | ||
Not to be, although easily, confused with {{isdaprov|Termination Events}} under the {{isdama}}. These are (in the main) kinder and gentler than {{isdaprov|Events of Default}}, arise from factors outside the parties control ({{isdaprov|Force Majeure}}, {{isdaprov|Tax Event}}s, {{isdaprov|Credit Event Upon Merger}}s, {{isdaprov|Illegality}} and so on), and in many cases relate to some only and not all of the {{isdaprov|Transaction}}s under the {{isdama}}. They justify termination but at less punitive [[mid market]] terms. There are some Termination Events which are more like Events of Default, though: most of these are the tailored ones the parties agree as {{isdaprov|Additional Termination Event}}s. | Not to be, although easily, confused with {{isdaprov|Termination Events}} under the {{isdama}}. These are (in the main) kinder and gentler than {{isdaprov|Events of Default}}, arise from factors outside the parties control ({{isdaprov|Force Majeure}}, {{isdaprov|Tax Event}}s, {{isdaprov|Credit Event Upon Merger}}s, {{isdaprov|Illegality}} and so on), and in many cases relate to some only and not all of the {{isdaprov|Transaction}}s under the {{isdama}}. They justify termination but at less punitive [[mid market]] terms. There are some Termination Events which are more like Events of Default, though: most of these are the tailored ones the parties agree as {{isdaprov|Additional Termination Event}}s. | ||
{{sa}} | {{sa}} | ||