At the same time as the timetable, the framework agreement defines all the general conditions necessary for the proper distribution of the risks of transactions between the parties, but does not contain specific terms and conditions for a particular transaction. Once the framework agreement has been concluded, the parties can enter into numerous transactions by agreeing to the essential terms and conditions over the telephone, as confirmed in writing, without the need to re-consider the terms of the framework agreement. The 1990s led to a significant production of documents by ISDA, including (i) a revised version of the swap code, known as the 1991 ISDA definitions, which were then designed and replaced by the 2000 ISDA definitions; (ii) a revision of the 1987 Framework Agreement that resulted in the 1992 Framework Agreement; (iii) the 1992 Masteragrement user guide, developed in 1993, which details the various sections of the 1992 master contract; (iv) definitions of commodity derivatives developed in 1993 and completed in 2000; and v) the annex, which provides for additional documentation, completed in 1994, followed by its manual of use in 1995. A significant change is the calculation of the amount of the transaction that ends prematurely due to a delay event or termination event. In the 1992 form, the final amount of a transaction was determined by the market quotation (required by distributors` offers) or the loss (which was the finding of a party`s loss or profit) as determined in the timing of the master contract. The changes to the methodology of the amount of financial statements were motivated by doubts that, under stressed market conditions, it might be difficult to obtain meaningful ratings and that the “Loss” standard was too subjective. In the 2002 form, the amount of financial statements is the amount of losses or costs or profits (as appropriate) in the current circumstances, replacing or providing for the economic equivalent of the essential terms of the terminated transactions and potential option rights. With respect to determining the amount of the “close-out,” the determining party (i.e. the party determining the amount of the close-out) is accused of acting in good faith and applying economically appropriate procedures to achieve an economically reasonable result.
Subject to this standard, the determining party may consider all relevant information, including third-party offers, market data provided by third parties, and certain types of information generated internally. The determining party must take into account offers or market data provided by third parties, unless it considers in good faith that they are not readily available or do not meet the “commercially appropriate” standard. This uniform approach to the agreement is an integral part of the structure and part of the network-based protection offered by the framework agreement.