Template:M summ 1992 ISDA 5(b)(i)
1992 User Guide
Section 5(b)(i) provides that a Termination Event will occur if it becomes unlawful for a party (or if relevant its Credit Support Provider) to:
- make or receive a payment or delivery
- comply with any material provision of a 1992 ISDA or
- perform under a Credit Support Document.
The party to whom the Illegality has occurred will be the “Affected Party”. This Termination Event excludes breach by a party of its Section 4(b) obligation to maintain authorizations necessary under a 1992 ISDA or any Credit Support Document. Any such breach thus will be treated as an Event of Default and not an Illegality.
This Termination Event has been modified from the 1987 ISDA to refer to physically-settled transactions and to replace the reference to “Specified Entity” in the corresponding provision of the 1987 ISDA with “Credit Support Provider” because clause (2) of Illegality relates to Credit Support Documents.
Section 5(c) of the 1992 ISDA addresses where an Event of Default also constitutes an Illegality by providing that such it will be treated as an Illegality.