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LL202 Commercial Contracts

LL202 Commercial Contracts. Chris von Csefalvay. BE PREPARED. EXAMS ARE COMING. SLEEP. CHILL. TURN UP. WIN. Financial positions as contracts. Trades -> contracts for sale Creation of derivatives -> contract to x|y Loan origination -> loan agreement. Financial innovation.

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LL202 Commercial Contracts

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  1. LL202 Commercial Contracts Chris von Csefalvay

  2. BE PREPARED. EXAMS ARE COMING.

  3. SLEEP. CHILL. TURN UP. WIN.

  4. Financial positions as contracts • Trades -> contracts for sale • Creation of derivatives -> contract to x|y • Loan origination -> loan agreement

  5. Financial innovation • = creation of new synthetics • Market creation (creating wide markets over untradables) • Market standardisation (ISDA, LMA FcA) • Credit risk mitigation • Repackaging

  6. Common causes of action • Misrepresentation • Suing agents, arrangers and third parties • Penalty clauses (though not with much success: BNP Paribas v Wockhardt [2009] EWHC 3116 (Comm) (QBD)

  7. Derivatives • = contracts under which performance is contingent on a specified asset, entity or benchmark (Benjamin, [4.31]) • Can be exchange-based or OTC

  8. OTC v exchange-based • OTC ∂/s are highly bespoke • Exchange-based ∂/s are by necessity standardised, strictly regulated but widely tradable

  9. Q1: Rules of construction • What about construction/precedent issues? • Meaning of ‘intention’

  10. Q2: Barley v Maple • i% swap • Variable leg: Barley -> Maple variable I on £250m • Fixed leg: Maple -> Barley fixed I on £250m

  11. End of session 11 See you tomorrow morning in the same place. – Please do the recommended readings and think about the questions.

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