Unit 1 - The Choice of Law, Enforcement, Contractual Interpretation

• Determining which law is applicable to which types of transaction
• Understanding the different types of law that can be applicable to financial transactions
• Resolving how to enforce contractual rights where multiple jurisdictions are involved
• Identifying how contracts are interpreted in English Law
• Summarising the need for lenders to sell down financial assets
• Debating the documentation implications of lender sell-down

Firstly we take a step back and take a look at how the law works. This involves an examination of the following:

• There are 206 countries in the world. Whose law will govern crossborder transactions?
• Where English law is chosen, in what circumstances will we encounter statute law, common law, or equity law?
• Since in corporate lending transactions it mostly common law that applies, how does the common law actually work?
• If I get a judgment in my favour, how can I apply it against the assets and cash flows of my counterparty, especially if they are located in another country?

All of the agreements we will look at during this course, loan agreements, guarantees and security arrangements - have one thing in common. They are all contracts:

• If I have a contract, how safe is it to negotiate the wording of a draft agreement?
• Does the law apply special meaning to certain words or phrases?

A controversial area of legal documentation surrounds the right of financiers to sell-down loan assets. This topic starts with a summary of why lenders need this right, how it has been complicated by Basel capital adequacy rules, and what safeguards borrowers should be introducing into the documentation regarding consents and confidential information.

• Local law
• International systems of law
• Finance documentation - Standardisation

• Statute law
• The common law
  • binding precedent
  • justice
• The Law of Equity
  • rights
  • defences
  • misapprehension
  • misrepresentation
  • non est factum
  • undue influence
  • warning note

• Law of the contract
• Jurisdiction
  • non-exclusive jurisdiction
  • European directive
  • irrevocable submission
  • service of process
• Enforcement - Legal opinions
  • political risk

• Literal interpretation
• The Ejusdem Generis rule
• Contra proferentem
• Promissory estoppel

• Evidence
• Administration
• Credit

• Motivations for Sell-Down
• Traditional origins
• More recent forces
  • Basel
  • perverse results
  • documentation implications
• Sell-down methodologies
  • novation
  • legal assignment
  • equitable assignment
  • funded sub-participation
  • risk participation
• Documentation of sell-down