Master Agreement: Fill & Download for Free

An “ISDA” is short for an International Swaps and Derivatives Association Master Agreement. This is a standardized contract that defines the rules for most over-the-counter derivatives trading. There are two main versions of the master agreement, plus some less common ones like the Tahawwut Master Agreement for use under Islamic law. You also sign a Credit Support Annex and a Schedule, both of which can be partially negotiated, unlike the Master Agreement.Having one standardized contract simplifies legal work, especially when transferring contracts. If lawyers had to negotiate, draft and check every word for every derivatives trade, there wouldn’t be much derivatives trading.

For most consumer things under US law. No. The contract would be a contract of adhesion (i.e. a take it or leave it contract) and under US law, a contract of adhesion cannot include terms that would not be expected. I don't think consideration or unconscionability are the correct legal defenses isn't under the peppercorn rule it's trivial to put in consideration and unconscionability would matter for a case involving a million dollars, but you can imagine a smaller amount that would be "conscionable" (i.e. if you bury in the contract that you owe me ten dollars a month).I work in a field (i.e. finance) in which people routinely click on links saying "I owe you 1 million dollars" and in fact they do owe a million dollars. The way that these sorts of contracts work is that two parties agree ahead of time about the terms of their trades in a master agreement. Once the two banks agree then clicking on a web link say "I owe you a million dollars" or just calling someone up and saying "I owe you a million dollars" is considered an addition to the original master agreement.The master agreements are not contracts of adhesion so the terms are binding. The master agreements invariably have a "manifest error" clause, saying that a trade is not binding if it is obviously in error. For example, if I agree to pay a million dollars for an ounce of gold because I mistyped the order (and this *does* happen) then the terms of the contract exclude trades that are "manifestly erroneous".There was a case in Hong Kong in which Goldman-Sachs mistyped a contract resulting in a massive windfall for warrant investors. Unfortunately for the investors, GS was able to argue "manifest error" and didn't pay out on the errorneous contracts.http://www.scmp.com/article/964202/goldman-stops-issuing-derivative-warrants-after-errors

Actually, the ISDA Master Agreements is a huge document that painstakingly defines the obligations of the parties, and the terms and conditions of a trading relationship that governs the individual trades.Each trade has its own contract, called a confirmation document, usually around 2 or 3 pages, with copious references to the ISDA Master Agreement. It also refers to another document called the ISDA Definitions, a glossary about 80 pages long that precisely defines what terms like USD 3M Libor means (what it costs to borrow a specific minimum amount of USD for a period of 3 months, on a specific date). The more structured a trade is, the more complex the contract becomes.If one or both parties do not subscribe to the ISDA Master Agreement, and still want to get into a swap, both would have to painstakingly agree on all definitions that relate to a trade. Sure, if it's in a trust based society, the confirmation document, the contract, could be little more than oral agreements and perhaps a handshake. But in a capitalist society, the list of terms and conditions would easily match the size of the ISDA Master Agreement, Definitions, plus countless other appendices and agreements that are prodced from time to time by ISDA working groups. What precisely is a margin? What happens when you clear a trade? Who is responsible for calculating, and when? Which rate do we use when Reuters publishes a new USD 3M Libor rate, 30 minutes after the one it initially published at 11:30am on a good business day in London? What is a good business day in London?To avoid the astounding array of possible situations that could happen over countless trades in different currencies, rates, jurisdictions, etc, lawyers representing both counterparties hammer out the details of the ISDA Master Agreement.