Default risk meaning

Legal issues This checklist sets out the main terms and matters to bear in mind when preparing and negotiating indemnity provisions in commercial (business-to-business) contracts. For model wording with drafting notes, see Precedent: Indemnity clause-commercial contracts. For more on indemnities, consult the following Practice Notes: Indemnities in commercial contracts Guarantees and indemnities-general contract For a practical guide to reviewing an indemnity clause in B2B agreements, see Practice Note: How to review an indemnity clause. General comments What to watch out for Is an indemnity appropriate? An indemnity is a contractual promise by one party to reimburse the other for specified loss or damage or, in some instances, to relieve them from liability. Unlike a guarantee, it imposes a primary obligation that may not rely on a third party’s default. Assess if an indemnity is the right mechanism or whether a guarantee is preferable, for example where a parent company guarantees a subsidiary’s obligations. If advising the indemnifier, consider...

STOP PRESS: This document is being revised to take account of the Data (Use and Access) Act 2025 (DUAA 2025), which updates the UK GDPR and the Data Protection Act 2018. For more on the compliance impact of DUAA 2025, see Practice Note: Data (Use and Access) Act 2025—compliance implications... This Flowchart steers you through the lawful mechanisms for sending personal data to a country outside the UK, for example: an adequacy decision or regulation appropriate safeguards such as standard contractual clauses (SCCs) or the International Data Transfer Agreement (IDTA), or binding corporate rules (BCRs) a derogation Such transfers are barred by the data protection regime unless one of these tools is in place. These mechanisms exist to ensure data subjects remain protected when their personal data leaves the UK... The mechanisms follow a hierarchy, and this Flowchart helps you select the route most suitable for your organisation and processing operations... This Flowchart reflects the UK General Data...

Original news Mr Y (CAS-57893-P0C6)—20 August 2025 / Ms R (CAS-58612-P1X1)—18 July 2025 Summary The Pensions Ombudsman dismissed a complaint concerning a loan note investment. The scheme’s independent trustee bore no responsibility for losses arising from this high-risk, speculative asset. The complainants had completed forms confirming the trustee was not giving investment advice and could not be held accountable for any investment loss. The arrangement ran on an execution-only basis. The trustee also undertook appropriate due diligence before proceeding. In light of these factors, no liability ultimately attached to the trustee for the loan note loss. The determination highlights the perils of placing funds into non-standard investments. Accordingly, the complaint failed. What were the facts? Ms R and Mr Y were members of the Westerby Pension Scheme (the Scheme). The Scheme was a self-directed, self-invested personal pension (SIPP) scheme. Westerby Trustee Services Limited (Westerby) was the Scheme’s independent trustee and administrator...

Financial services developments ESMA consults on CCP collateral and investment policy standards following EMIR 3 review The European Securities and Markets Authority (ESMA) has initiated a public consultation on draft regulatory technical standards (RTS) to amend Commission Delegated Regulation 153/2013, following the European Market Infrastructure Regulation (EMIR 3) review. The call for input invites feedback on: conditions for central counterparties (CCPs) to accept public guarantees, public bank guarantees and commercial bank guarantees as collateral; criteria under which debt instruments qualify as eligible financial instruments within CCP investment policy; highly secured arrangements for emission allowances lodged as margins or default fund contributions. EMIR 3 makes permanent a broader range of guarantees eligible as collateral and extends scope to clients of CCPs that are non-financial counterparties. The consultation closes on 30 April 2026, with ESMA submitting final draft RTS to European Commission by end-2026...

In this issue: Key DR developments Claims and remedies Costs and funding Injunctions Litigation Applications—specific International guidance Dates for your diary Useful information Daily and weekly news alerts Key DR developments Court information HM Courts and Tribunals Service (HMCTS) has released a podcast featuring David Kerry and David Franks. It sets out the advantages of mediation and explains recent changes to the Small Claims Mediation Service, including how the service can deliver faster dispute resolution. For more detail, see: LNB News 15/08/2024 8—HMCTS releases podcast highlighting benefits of Small Claims Court Mediation Service. Claims and remedies Civil fraud—unlawful means conspiracy In Takhar v Gracefield Developments Ltd [2024] EWHC 1714 (Ch), after a judgment was set aside because the claim failed due to a forged document, the claimant used that same forgery to mount a fresh and successful claim for unlawful means conspiracy. Phillip Patterson, barrister at Gatehouse Chambers, considers the...

What are investment-grade, high yield and crossover bonds? Investment grade (IG) bonds are debt instruments that hold an IG credit rating: BBB and above on the S&P and Fitch scales, and Baa3 and above on the Moody’s scale (for further detail on credit ratings, see Practice Note: Credit ratings). IG issuers are usually sizeable blue‑chip corporates—well‑known, well‑established and well‑capitalised—and are often companies with shares listed on a major stock exchange. Aside from sovereign bonds of developed markets, IG securities are widely regarded as among the safest income‑generating investments. As a consequence of this perceived safety, IG bonds tend to offer lower yields than high yield (HY) bonds. Many institutional investors and pension schemes operate policies and mandates that constrain their bond holdings to assets with, on average, lower default risk, such as IG instruments or government obligations. In broad terms, HY bonds encompass all bonds from issuers rated below IG. HY issuers may include public companies that lack (or previously had but later lost) an IG rating, private companies...

This Practice Note examines when parties may agree to extend the period for complying with a rule, practice direction or court order that obliges them to take a step within a fixed timeframe and sets out the consequences of any default. For wider guidance on extensions of time, including matters falling outside CPR 3.8(4), see Practice Note: Extension of time. This Practice Note should also be read alongside material addressing the court’s response to party non-compliance and applications for relief from sanction arising from such breaches, which can be found in: Compliance and relief from sanctions—overview. Agreeing an extension of time under CPR 3.8(4) CPR 3.8(4) allows the parties, by prior written agreement, to extend the deadline for performing an act specified by the CPR or a court order where the consequences of failure are prescribed. Any such extension is limited to a maximum of 28 days and must not place any hearing date at risk (CPR 3.8(3) and CPR 3.8(4))...

This Practice Note looks at: the principal features of loan to value (LTV) covenants in secured lending transactions possible issues with calling an event of default arising from a LTV covenant breach potential challenges to an event of default based on a LTV covenant breach remedying a LTV covenant breach the impact of the economy on LTV covenant breaches LTV covenants are a vital element of risk management in secured lending. An LTV covenant is a common financial covenant that requires the outstanding principal of a loan, expressed as a percentage of the value of the security charged in favour of a lender, to stay below a specified threshold for the life of the loan. This gives lenders a means to monitor and protect the strength of their security over time. For borrowers, grasping and negotiating these covenants is key to achieving favourable loan terms and steering clear of the pitfalls that can arise from a breach. Although a...

Effective from [ insert date ], this statement of investment principles applies. 1 Statement of investment principles 1.1 Purpose of statement This document outlines the principles that steer decisions on investing the assets of the [ insert name ] Pension Scheme (the Scheme). It is published by the Trustees of the [ insert name ] Pension Scheme (the Trustees) to meet the requirements of the Pensions Act 1995, s 35. 1.2 Review The statement will be assessed each year. The Trustees may conduct an ad hoc review at any time if they consider there has been a material change in investment policy, or any other circumstances affecting the Scheme. 1.3 Advice The Trustees have received and evaluated written advice on the contents of this statement in a letter from [ insert name of investment consultant or actuary ]. [ insert name ] have confirmed to the Trustees that, through their ability and practical experience in financial matters, and with appropriate knowledge...

RECITALS Fifth Recital replaced: the Contractor has issued a master programme and a Schedule of Information Requirements. Twelfth Recital replaced: the Contractor has examined the Site and, where a Contractor’s Design Portion applies, accepts full responsibility for the design satisfying the Employer’s Requirements. ARTICLES Article 9 (Arbitration) deleted. New Article 11 incorporates the initialled Schedule of Amendments; Article 12 obliges compliance with Third Party Agreements and acknowledges resulting liabilities. CONTRACT PARTICULARS Procurement references updated to the Procurement Act 2023; default Rectification Period set to 12 months; various arbitration, fluctuations and CDP PI expiry entries removed. CONDITIONS Key definitions revised or added, including Building Safety Regulator, Practical Completion, Copyright Material, Design Sub‑contractors, Third Party Agreements and HRB terms. Exclusive court jurisdiction stated; third party rights restriction; arbitration references removed. Strengthened CDP obligations, materials standards, programme/reporting, golden thread information storage, higher‑risk building procedures, confidentiality and IP licensing;...

This approval form sets out the grounds on which the project described in your [ data protection impact assessment (DPIA) OR privacy impact assessment (PIA) ] has been approved, alongside the data protection compliance steps you must implement. The final [ DPIA OR PIA ] is attached and contains full particulars of the guidance summarised below—please review both documents carefully before implementing your project. If you need any additional details or assistance, please contact [ insert relevant point of contact, eg your organisation’s data protection officer (DPO) or data protection manager (DPM) ]...