A master agreement is a legal document that outlines the terms and conditions of a transaction or a series of transactions between two parties. It is often used in complex financial transactions, such as derivatives, to simplify the process of entering into transactions and to reduce legal costs. The governing law of a master agreement is an essential consideration when drafting the document.
English law is a popular choice for governing master agreements because of its reputation for being stable, predictable, and well-established. It is also recognized as an internationally respected legal system. English law is commonly used in global financial markets as it provides a level of certainty and clarity that makes it attractive to participants from various countries.
When drafting a master agreement governed by English law, the document should include certain key provisions. These provisions relate to the obligations of the parties, the events of default, the governing law and jurisdiction clauses, and the termination provisions.
One important term to include in a master agreement is the obligation of the parties to act in good faith. This means that they must act honestly and fairly towards each other and fulfill their commitments in a timely manner. The events of default clause outlines the circumstances under which a party can terminate the agreement because of a breach of contract.
The governing law and jurisdiction clauses specify that English law governs the master agreement and any disputes that arise out of it. This means that any disputes will be resolved under English law, and the courts of England will have jurisdiction over the matter.
Finally, the termination provisions set out the circumstances under which the agreement can be terminated. This can include events such as insolvency or a material breach of contract.
In conclusion, a master agreement governed by English law is a popular choice for complex financial transactions due to its stability, predictability, and international recognition. It is essential to ensure that the agreement contains the necessary provisions, including those dealing with obligations, events of default, governing law and jurisdiction, and termination clauses. By including these provisions, parties can ensure that their legal interests are protected and that disputes can be resolved efficiently.