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 framework contract allows for the clearing of payments due in the same transaction, so that only one amount is exchanged between the parties instead of a large number of payments for the same transactions. Most counterparties also agree to agree on all amounts due in a single day, whether amounts are due in one or more transactions. IsDA Masteragrement is an internationally agreed document, published by the International Swaps and Derivatives Association, Inc. (ISDA), which aims to provide some legal and credit protection to parties engaged in over-the-counter or over-the-counter derivatives transactions. Most multinational banks have ISDA master agreements. These agreements generally apply to all branches engaged in currency, interest rate or option trading. Banks require counterparties to sign an exchange agreement. Some also require exchange agreements. While the ISDA master contract is the norm, some of its terms and conditions are changed and defined in the accompanying schedule. The schedule is negotiated, either to cover (a) the requirements of a given hedging transaction or (b) a current business relationship.
Section 6 of the ISDA Master Contract contains provisions allowing one party to prematurely terminate transactions when a delay or termination event occurs for the other party, and describes the procedure for calculating and paying net termination values for those transactions, up to a one-time payment between the parties. The framework contract allows the parties to calculate their net financial commitment in over-the-counter transactions, i.e. a party calculates the difference between what it owes to a counterparty under a master contract and what the consideration owes under the same agreement.