Template:Isda 2(a)(iii) summ: Difference between revisions

Section {{{{{1}}}|2(a)(iii)}} just ''sits'' there, and has effect, without anyone’s particular by-or-leave. No notice is required: no-one need look out for envelopes being delivered to the physical address the firm occupied seventeen years ago when someone filled out Part IV of the schedule. Section {{{{{1}}}|2(a)(iii)}} doesn’t even say an {{{{{1}}}|Innocent Party}} is ''entitled'' to withhold payment: rather the conditions are not met and ''payment is not therefore due''. The effect of Section {{{{{1}}}|2(a)(iii)}} just ''happens'' if an EOD or PEOD exists. Now some EODs are determinative; some less so — {{isdaprov|Misrepresentation}}s, for example and some may be entirely beyond the ken of the {{isdaprov|Innocent Party}} whose payment obligations 2(a)(iii) suspends, such as an undeclared {{isdaprov|Cross Default}}.

Section {{isdaprov|2(a)(iii)}} might apply, that is to say, without anyone ''realising'' it. This poses some rather intriguing questions.

First, a ''conceptual'' one: at what point do we know — when even do ''I'' know  — whether I have “suspended” my payment and not just simply ''failed'' on it? Is there a difference? The payment arrangements under a modern {{isdama}} are a blizzard of electronic impulses, across multiple booking systems, product silos and other arrangements. The good people of FX ops will know everything there is to know about the currency pairs, but will have not the first notion about the rates portfolio, let alone the weirdos in structured credit — and sometimes payments fail for explainable reasons. So what happens if, for some reason {{{{{1}}}|2(a)(iii)}} applies — did a trader in a weak moment repudiate a contract during a collateral dispute? — and the conditions precedent to my payment do not exist, but I make my payment anyway? Is that a mistaken payment? Is it supported by [[consideration]]? Is there a potential claim for [[money had and received]]?