Conditions And Covenants In Debt Documents: Strict vs. Substantial Performance

In the recently decided case of The Bank of New York Mellon Trust Company, N.A. v. Morgan Stanley Mortgage Capital, Inc. (2d Cir. April 27, 2016), a divided panel of the Second Circuit addressed the question of whether a trustee had timely exercised its right to require the seller of a mortgage loan deposited to a securitization vehicle to cure the breach of an underwriting representation. Along the way the panel had occasion to explore differences between a condition precedent and an obligation to perform, the concept of substantial performance of a performance obligation, and "awareness" of an organization where action must be approved through a chain of command.  What is perhaps remarkable about the opinion is the level of granularity at which the court, both majority and dissent, parsed the relevant contractual provisions, which validates the close attention that parties to complex debt arrangements should apply to their documentation.