Module 2 · Chapter 7

Payments, Netting and the Calendar

Clause 2 of the master agreement turns each Confirmation into payments on the right day, netted to one. It also lets a party hold back payment while the other side is in default.

≈ 15 min read 8-question test

In this chapter

  • How clause 2 pays each Confirmation on the right day, as one payment
  • What the rules on tax, late payment, disputes and notices add
  • When a party may hold back a payment, and why the loan has no such rule

7.1What clause 2 does

Clause 2 of the master agreement is where money moves. It sets no rate and no amount, because each Confirmation does that. Clause 2 makes each party pay what its Confirmation requires, on the right day and to the right account. On each date, it nets what the two sides owe into one payment.

The clause also deals with tax and late payment. Its shortest paragraph matters most: a party need not pay while the other side is in default.

Key point

The Confirmation sets what is owed. Clause 2 decides when, where and how it is paid. On each date, one net payment moves.

Also in this chapter

  1. Paying the right amount to the right account
  2. Moving a payment date off a holiday
  3. One payment on each date
  4. Three kinds of netting
  5. Tax taken at source: the gross-up
  6. Paying late: default interest
  7. Disputing the bank's figures
  8. Notices that can end the trades
  9. Holding back payment while the other side is in default
  10. Why the loan has no such rule
  11. Your job

Preview

The rest of this chapter opens with a free account. Every edition is free to read until 31 January. Open a free account by the end of that day and keep every edition published by then, for good. Open it from the edition home →