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==Commentary== | ==Commentary== | ||
===={{isdaprov|Additional Events of Default}}==== | |||
Note that additional events of default may be set out in Part 5 of the [[ISDA Schedule]]. | |||
===={{isdaprov|Illegality}}==== | |||
{{isdaprov|Illegality}} trumps {{isdaprov|Event of Default}}. Be careful where, for example, a {{isdaprov|Failure to Pay}} is occasioned by a mandatory change in law by a government having jurisdiction over one or other counterparty - see {{isdaprov|Illegality}}. Good example: Greek capital controls of June 2015. | |||
==={{isdaprov|Termination Events}} and | ===={{isdaprov|Termination Events}} and Events of Default==== | ||
{{isdaprov|Termination Events}} and {{isdaprov|Events of Default}} under an {{isdama}} are similar in that when they occur to one party (the {{isdaprov|Affected Party}} or {{isdaprov|Defaulting Party}}) the other may terminate outstanding trades under the agreement. Differences: | {{isdaprov|Termination Events}} and {{isdaprov|Events of Default}} under an {{isdama}} are similar in that when they occur to one party (the {{isdaprov|Affected Party}} or {{isdaprov|Defaulting Party}}) the other may terminate outstanding trades under the agreement. Differences: | ||
*'''Events of Default''': As the word "default" implies EODs are treated as the ''fault'' the defaulting party and may give rise to third-party default rights (where the relevant {{isdaprov|Cross Default}} extends to derivatives and trading documents); | *'''Events of Default''': As the word "default" implies EODs are treated as the ''fault'' the defaulting party and may give rise to third-party default rights (where the relevant {{isdaprov|Cross Default}} extends to derivatives and trading documents); | ||
*'''Termination Events''': There is less "moral turpitude" associated with a Termination Event under an {{isdama}}, and they will generally not trigger Cross Defaults (not amounting to "defaults". | *'''Termination Events''': There is less "moral turpitude" associated with a Termination Event under an {{isdama}}, and they will generally not trigger Cross Defaults (not amounting to "defaults". | ||
===Types of Events of Default=== | ====Types of Events of Default==== | ||
Events of Default can be categorised: | Events of Default can be categorised: | ||
*'''Independently Verifiable''': Some by their nature can independently verified without affirmation from the Counterparty particularly: | *'''Independently Verifiable''': Some by their nature can independently verified without affirmation from the Counterparty particularly: |