Rights, Duties and Obligations of Counter-Parties following Default under Derivative Contracts

Abstract

The article discusses the use of derivative contracts as a risk-management tool and the results of terminating such contracts, including: termination under conditions of insolvency and non-insolvency of a counter party; the use of collateral security to mitigate the risks of contractual obligations that might terminate prematurely; the duty to negotiate in good faith; notice requirements for termination of a derivative contract; and damages/penalties that arise when a contract is terminated prior to completion.