Efet General Agreement Gas

The agreements and the EFET library associated with it, with additional documentation, are currently the industrial standards applied throughout Europe to the trade in physical energy and gas. EFET has commissioned legal opinions on the applicability of general power and gas agreements for many European countries, which are available to EFET members. The applicability of the general terms of sale of EFET in each country may vary according to local laws and customs. A list of countries and the cost of obtaining such legal advice are available on the EFET website (www.efet.org). In any event, the general agreement describes the concept of the agreement very early on the document (see section 1.1), which means that all transactions depend on each other and a failure is considered the norm in all transactions covered by the agreement These standardized master agreements for the supply and acceptance of electricity or natural gas , offer a structure similar to that published by the Association of International Trading Contracts and Derivatives of Enterprise Inc. (ISDA) for OTC trading contracts. The EFET agreement is a compensation-master contract that can cover an unlimited number of trades defined as „individual contracts.“ Each contract includes the economic conditions of each trade (for example. B start and end date, delivery plans, contract capacity and quantity, price and total cost). The general agreement contains a number of standard conditions for delivery conditions, payments, delivery defects and completion. These conditions apply to any underlying transaction. THE EFET encourages competition, transparency and open access in Europe`s energy sectors.

EFET agreements are used to document transactions between parties in different jurisdictions for the supply and acceptance of electricity and gas. The general agreement consists of 23 sections and an electoral ballot (similar to an ISDA master-convention plan) in which the agreed complements and amendments to this general agreement are made. EFET has published two main documents: the EFET electricity (electricity) and gas agreements, which are standard contractual contracts for use by distributors, in order to increase liquidity in the wholesale market by setting standard conditions for underlying transactions. Changes to the standard text should be made to the election newspaper and not to the main part of the general agreement. Usually, buyers and sellers who use the EFET agreement develop their own „home view“ on the terms of their election paper, based on their market position. One of the most important issues to consider in developing such a position and in negotiations with counterparties is the credit risk and credit support that the parties are willing to accept or demand. Parties who do not have a credit or guarantee of a parent company are generally required to use commercial banks. There are also country and trade-specific annexes, developed by the EFET, to complement the terms of the general agreements, including: EFET has commissioned legal advice on the applicability of general agreements and EFET guarantee agreements in various legal systems. Dentons Paris` capital markets team discussed, among other things, the „close-out netting“, the validity, applicability and guarantees of the EFET`s general agreements. Derivatives Documentation Limited thanks our guest blogger Ernst van den Broek, founder of Trading Lawyers (www.tradinglawyers.com), for transmitting this useful synthesis of EFET agreements.

Ernst has more than 15 years of experience in the financial sector and regularly negotiates and offers training on ISDA master contracts, CSAs, GMRAs, GMSLAs and EFETs.