In the event of a conflict between this agreement, the mastership of the IEE, the NAESB agreement, the collateral annex or the master compensation agreement, the priority is first the „master netting“ agreement and, secondly, if the conflict between the agreements cannot be resolved under the Master Netting Agreement, priority will be given to this agreement. „All transactions are concluded on the basis that this master contract and all confirmations form a single agreement between the parties … and the parties would not make transactions otherwise. This agreement includes, with the exhibitions, the IEEE masteragrement, the NAESB agreement, the collateral annex and the master compensation agreement, the comprehensive agreement between the parties regarding the provision of services as contained in it and replaces all other written or oral agreements relating to the subjects contained in it. The framework contract allows the parties to calculate their net financial commitment in over-the-counter transactions, i.e. a party calculates the difference between what it owes to a counterparty under a master contract and what the consideration owes under the same agreement. The ISDA Masteragrement, published by the International Swaps and Derivatives Association, is the most widely used master service contract for otC derivatives transactions internationally. It is part of a documentary framework that aims to provide comprehensive and flexible documentation on OVER-the-counter derivatives. The framework consists of a master contract, a calendar, confirmations, definition brochures and credit support documentation. The framework contract also helps to reduce litigation by providing significant resources that define its contractual terms and explain the intent of the contract, thus preventing litigation from beginning and providing a neutral resource for interpreting standard contractual terms.
Finally, the framework agreement provides significant assistance in managing risks and credit for the parties. The framework contract allows for the clearing of payments due in the same transaction, so that only one amount is exchanged between the parties instead of a large number of payments for the same transactions. Most counterparties also agree to agree on all amounts due in a single day, whether amounts are due in one or more transactions. The framework contract is quite long and the negotiation process can be difficult, but once a framework contract is signed, the documentation of future transactions between parties will be reduced to a brief confirmation of the essential terms of the transaction.
