Banking Law Seminar 11

What is cross-default?

• All of the creditors are to stand in equal step

• Maintenance of the credit worth of the borrower is significant

• When both parties fail to perform their contractual obligations

• A contractual provision which puts a borrower in default if the borrower defaults on another obligation

How do you call setting-off of any amounts owed between the parties in the event of the insolvency of one of them?

• Bankruptcy

• Clearing

• Netting

• Close-out netting

Master agreements help

• Both parties avoid financial risks

• Regulatory authorities when dealing with systemic risk

• Remain solvent even when crises erupt

• Both parties to master their financial skills and knowledge

Master agreements usually contain provisions related to

• pricing of financial products

• quantity of financial products

• events of default

• All answers are correct

What may happen if a standardized master agreement is printed out and used for an unusual exotic financial transaction?

• This is very widespread in financial markets, because this practice creates no problems

• Lawyers do not recommend to do it, because this may invalidate a contract

• Investment banks prefer to do this, because this saves time, money and effort while courts will recognize this contract as enforceable

• No financial institution would do that, because they mostly conclude contracts orally

What is condition subsequent in (financial) contracts?

• is a condition in a contract which might occur after the contract had been formed and after the parties had begun to perform the terms of that contract, but which would cause the contract to

  be terminated

• a condition which must be performed before the contract comes into effect

• a condition to which both parties agree after the contract enters into force

• a contractual term which allows both parties to renegotiate the contract terms at some later point of time after the contract becomes effective

This person/entity is responsible for calculating the amount (if any) that is to be paid between the parties, the market value of the transactions, whether any collateral is required to be paid, etc.

• Financial Conduct Authority

• Calculation agent

• Her Majesty

• No correct answer

When a contracting party is required to pay its obligations earlier than they would otherwise become due is...

• Cross-acceleration

• Cross-default

• Acceleration

• Default

BNP Paribas v Yukos case is one of the cases related to

• Cross-default

• Cross-acceleration

• Material adverse change

• All answers are correct

International Monetary Funds may act as

• issuer of US dollars

• lender of last resort

• stock exchange

• No correct answer