Template:M summ 2002 ISDA 6(f): Difference between revisions
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{{set off capsule}} | {{set off capsule}} | ||
===A bit of a bish in the {{2002ma}}=== | ====A bit of a bish in the {{2002ma}}==== | ||
Set-off in the {{2002ma}} borrows from the text used to build it into the {{1992ma}} (see below) but still contains a rather [[:Category:Schoolboy error|elementary fluff]]. It imagines a world where the {{isdaprov|Early Termination Amount}} is payable one way, while ''all'' {{isdaprov|Other Amounts}} are only payable the other. Life, [[as any fule kno]], is not always quite that convenient. | Set-off in the {{2002ma}} borrows from the text used to build it into the {{1992ma}} (see below) but still contains a rather [[:Category:Schoolboy error|elementary fluff]]. It imagines a world where the {{isdaprov|Early Termination Amount}} is payable one way, while ''all'' {{isdaprov|Other Amounts}} are only payable the other. Life, [[as any fule kno]], is not always quite that convenient. | ||
For example: | For example: | ||
{{subtableflex|47| | |||
{{isdaprov|Payer}} owes Payee an {{ETA}} of 10<br> | |||
{{isdaprov|Payee}} owes {{isdaprov|Payer}} {{isdaprov|Other Amounts}} of 50<br> | |||
---- | ---- | ||
Net: {{isdaprov|Payee}} owes {{isdaprov|Payer}} 40. | |||
}} | |||
But what if there are {{isdaprov|Other Amounts}} payable ''the same way'' as the {{isdaprov|Early Termination Amount}}? | But what if there are {{isdaprov|Other Amounts}} payable ''the same way'' as the {{isdaprov|Early Termination Amount}}? | ||
{{subtableflex|47| | |||
{{isdaprov|Payer}} owes Payee an {{ETA}} of 10 <br> | |||
{{isdaprov|Payer}} owes Payee {{isdaprov|Other Amounts}} of 40<br> | |||
{{isdaprov|Payee}} owes {{isdaprov|Payer}} {{isdaprov|Other Amounts}} of 50<br> | |||
---- | ---- | ||
Net: {{isdaprov|Payee}} owes {{isdaprov|Payer}} 40.<br> | |||
''Whoops: {{isdaprov|Payee}} is still owed 40 by {{isdaprov|Payer}} so is an unsecured creditor '''}} | |||
Not ideal. But fixable if you’re prepared to add some dramatically anal language: | Not ideal. But fixable if you’re prepared to add some dramatically anal language: | ||
{{quote|{{isdaprov|6(f)}} {{isdaprov|Set-Off}}. Any {{isdaprov|Early Termination Amount}} ''(or any other amounts, whether or not arising under this {{isdaprov|Agreement}}, matured, contingent and irrespective of the currency, place of payment of booking of the obligation)” payable to one party (the “'''Payee'''”) by the other party (the “'''Payer'''”), ...}} | |||
Revision as of 14:21, 22 December 2023
One does not exercise a set-off right willy nilly. Unless one is, mutually, settlement netting (where on a given day I owe you a sum, you owe me a sum, and we agree to settle by one of us paying the other the difference) set-off is a drastic remedy which will be seen as enemy action. You would not do it, without agreement, to any client you expected to keep. So, generally, use set-off as a remedy it only arises following an event of default.
A bit of a bish in the 2002 ISDA
Set-off in the 2002 ISDA borrows from the text used to build it into the 1992 ISDA (see below) but still contains a rather elementary fluff. It imagines a world where the Early Termination Amount is payable one way, while all Other Amounts are only payable the other. Life, as any fule kno, is not always quite that convenient.
For example:
|
Payer owes Payee an Early Termination Amount of 10 |
But what if there are Other Amounts payable the same way as the Early Termination Amount?
|
Payer owes Payee an Early Termination Amount of 10 Net: Payee owes Payer 40. |
Not ideal. But fixable if you’re prepared to add some dramatically anal language:
6(f) Set-Off. Any Early Termination Amount (or any other amounts, whether or not arising under this Agreement, matured, contingent and irrespective of the currency, place of payment of booking of the obligation)” payable to one party (the “Payee”) by the other party (the “Payer”), ...