2.1.4.70.4 Notices by facsimile - Optional

Section 12 of the ISDA Master Agreement allows for service of notices and other communications by facsimile. However, it provides that the burden of proving receipt of a fax is on the sender and will not be met by a transmission report generated by the sender's facsimile machine. Set out below is a suggested amendment to the ISDA Master Agreement that can be used if parties do not want to generate evidence beyond a transmission report to prove service of a facsimile and are willing to rely on a transmission report as proof of service.

The clause provides that if sent by facsimile, the notice or communication will be effective on production of a transmission report by the machine from which the facsimile was sent which indicates that the facsimile was sent in its entirety to the facsimile number of the recipient. This means that the parties are agreeing that it is the production of the transmission report by the sender's facsimile machine which constitutes effective service. Of course, the sender will need to prove such production if it wants to rely in legal proceedings on service in this manner.

There is an exception to when the production of the transmission report will constitute effective service. This is when the recipient notifies the sender that the facsimile was not received in its entirety in legible form. The first point to note about this exception is that it will operate only once the sender can establish through the transmission report that the facsimile was sent in its entirety to the relevant facsimile number. Of course the recipient will be able to use the exception only if it receives a facsimile in some form from the sender. For example, it might receive the indicated number of pages but the pages are wholly or partly illegible; or the pages might have been inserted upside down and therefore be received as blank pages other than with the details of the sender's facsimile number. If the recipient notifies (note that it does not need to prove incomplete or illegible receipt) the sender within one Local Business Day that the facsimile is not received in its entirety in legible form, then the notice will not be effective.

There is one situation where a recipient is at risk. This is when a transmission report shows that a facsimile was sent in its entirety to the relevant facsimile number when, in fact, nothing is produced by the recipient's facsimile machine. Under the recommended wording the recipient is deemed to have received that notice. This is an inherent difficulty because not all facsimile machines have an answerback mechanism similar to a telex answerback. It is not considered possible to draft a solution to this problem other than to adopt the wording in Section 12(a)(iii) (ie to require some other evidence of receipt).

To adopt this approach insert the following as an additional clause in Part 5 of the Schedule:

"Replace Section 12(a)(iii) with:

"(iii) if sent by facsimile transmission, on the date a transmission report is produced by the machine from which the facsimile was sent which indicates that the facsimile was sent in its entirety to the facsimile number of the recipient notified for the purpose of this Section unless the recipient notifies the sender within one Local Business Day of the facsimile being sent that the facsimile was not received in its entirety in legible form;""


Last Update Date 29 Jun 2011