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Derivatives are crucial for the global economy as they enable firms to hedge risks. For effective market function, strong legal foundations are essential; without common standards, each firm would have unique contracts, leading to more disputes and prolonged negotiations. The ISDA Master Agreement has fostered standardization over 35 years by providing a common contractual template for trading relationships between derivatives counterparties. It outlines key terms such as default definitions and contract termination conditions, allowing firms to transact confidently with a shared understanding of the market. Additionally, the agreement permits customization of relationships and accommodates various transactions in case of defaults, clarifying amounts owed.