The framework contract is quite long and the negotiation process can be difficult, but once a framework contract is signed, the documentation of future transactions between parties will be reduced to a brief confirmation of the essential terms of the transaction. The principles for resolving the question of whether a person has the power to hire him are not specific to derivatives, they are derived from the traditional law of the agencies. In essence, the relevant circumstances should be examined to determine whether the person had the real or obvious power to engage him in the transaction. It is customary for the parties to exchange lists of authorized signatories of persons authorized to make confirmations and mention them in the schedule of the ISDA master contract. This does not mean, however, that this is a determination of the question of authority and that a person who is not on one of these lists may be entitled to sign a confirmation. As part of market practice, this issue is dealt with on the condition that institutions are responsible for their own internal licensing issues and that anyone able to conduct OVER-the-counter derivatives transactions has the obvious power to do so. 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. Over-the-counter derivatives are traded between two parties, not through an exchange or intermediary. The size of the over-the-counter market means that risk managers must carefully review traders and ensure that authorized transactions are properly managed.
When two parties complete a transaction, they will each receive confirmation explaining their details and referring to the signed agreement. The terms of the ISDA master contract then cover the transaction.