FIBOFTF2 — Changes in Agreements and Contracts in response to legal SME review

Changes identified during subject matter expert review for agreements and contracts.

Implement minor changes in Agreement and Control for FIBOFTF55

At a Subject Matter Expert review with GRCTC the following observations were made which should be taken into account in the Agreements and Contracts ontologies”
• Contracts are necessarily bilateral – this does not mean they have two parties (bipartite) but that they have two sides
• Agreements with more than two sides, for example partnership agreements, are not contracts in that sense but are agreements
o FIBO BE will also need to be changed, to make OrganizationCoveringAgreement a child of Agreement not Contract
• CommitmentAtLarge should be a kind of UnilateralCommitment.
• A further kind of unilateral commitment would be one where one party makes a commitment explicitly to another party with their agreement. We did not discuss a name for this.
• Contract types should follow this, with TransferableContract becoming a kind of UnilateralContract (as well as its current parentage)
• TransferableContract was our own made-up name. Discussed whether there is a better name covering not only securities but other kinds of contract that can be passed on without the involvement of the principal, such as software licenses.
o Agreed we could call this NegotiableContract
• There is a separate legal situation in which a contract is assignable – this is where some part of the responsibilities of one or other party is handed on to a third party such as a bank, with the agreement of the principal. The two parties to the contract remain parties to that contract.
o This is covered in the definition and notes for isAssignable already and in an editorial note on TransferableContract
• Covering agreements such as a Master Agreement in swaps trading forms part of the arrangements around an agreement or transaction, by way of a kind of “Mechanism”
o We need not include this in FIBO Foundations but would want to consider it when implementing the REA concepts for Derivatives.
Not all of these insights will be implemented at the present time, for example we don’t really have the means to describe “sides” of an agreement – these would need to be framed in terms of clusters of commitments made by each party to the other(s).
We also do not have an obvious means of framing the “Mechanism” role of a master agreement, and will need to think about this during work on derivatives.