The following Banking & Finance Q&A provides comprehensive and up to date legal information covering:
Capitalised terms used in this Q&A follow the defined terms used in the ISDA Master Agreement.
Events of Default are events which give one party the right to terminate any outstanding Transactions under an ISDA Master Agreement. A decision to declare an event as an Event of Default will result in all Transactions between the parties being terminated, not just a Transaction to which a particular default might relate. As a result of such serious consequences, it is no small decision for a Non-defaulting Party to declare an Event of Default.
Events of Default are set out in Section 5(a) of the ISDA Master Agreement. These are:
Failure to Pay or Deliver
Breach or Repudiation of Agreement
Credit Support Default
Default under Specified Transaction
Merger Without Assumption
Termination Events also allow the parties to close out Transactions prior to their intended maturity date on the occurrence of an adverse event. Termination events are set out in section 5(b) of the ISDA Master Agreement and comprise of:
Force Majeure Event (only applicable if the 2002 ISDA Master Agreement is used)
Tax Event Upon Merger
Credit Event Upon Merger, and
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