Legal Definitions - S.W.

S.W.

S.W. is an abbreviation for the South Western Reporter.

The South Western Reporter is a series of legal publications that compiles and publishes the written opinions of state appellate courts in several southwestern U.S. states, including Arkansas, Kentucky, Missouri, Tennessee, and Texas. These published opinions serve as legal precedents, meaning they are authoritative rulings that future courts may follow when deciding similar cases. Lawyers, judges, and legal researchers use these reporters to find and cite case law.

• Example 1: During a trial, an attorney might argue that a specific point of law has already been decided by the Texas Court of Appeals in a case published in the South Western Reporter, Series 3, Volume 500, Page 123. This citation directs the court to the exact precedent supporting their argument.

  Explanation: This example shows how the abbreviation S.W. (or its full form) is used to refer to a specific volume and page within the legal reporter where a binding appellate court decision can be found and cited as authority.

• Example 2: A law student researching the legal standard for negligence in Missouri would consult the South Western Reporter to find relevant appellate court decisions from that state. They would look for cases decided by the Missouri Court of Appeals or the Missouri Supreme Court published within this reporter series.

  Explanation: This illustrates the role of the South Western Reporter as a primary resource for legal research, allowing individuals to locate and study the actual written opinions of appellate courts in the covered states.

SWAP

In commercial law, a swap refers to an agreement between two parties to exchange something, typically financial assets, payment streams, or other obligations, over a specified period and according to agreed-upon conditions. Swaps are often used to manage financial risks, such as interest rate or currency fluctuations, or to gain exposure to different markets.

• Example 1 (Interest Rate Swap): A manufacturing company has a loan with a variable interest rate, meaning its monthly payments can change based on market conditions. To gain predictability, the company enters into an interest rate swap agreement with a bank. Under this agreement, the company agrees to pay the bank a fixed interest rate on a notional principal amount, and in return, the bank pays the company the variable interest rate it owes on its loan. This effectively converts the company's variable-rate debt into a fixed-rate obligation, even though the original loan terms remain unchanged.

  Explanation: This illustrates a common type of swap where two parties exchange different types of interest payments (fixed for variable) to manage interest rate risk and achieve a desired payment structure.

• Example 2 (Currency Swap): A U.S. technology firm needs to make a large payment in Euros for an acquisition in Europe, but it primarily earns revenue in U.S. Dollars. To mitigate the risk of unfavorable exchange rate movements, the firm enters into a currency swap with a European bank. They agree to exchange an initial principal amount in one currency for an equivalent amount in the other, and then periodically exchange interest payments in their respective currencies, finally swapping the principal amounts back at maturity. This locks in an exchange rate for the duration of the swap.

  Explanation: This example demonstrates how a swap can be used to manage foreign exchange risk, allowing parties to exchange principal and interest payments in different currencies to hedge against fluctuations and secure predictable cash flows.

• Example 3 (Commodity Swap): An airline wants to protect itself from rising jet fuel prices. It enters into a commodity swap agreement with a financial institution. The airline agrees to pay a fixed price per barrel for a specified quantity of fuel, and the financial institution agrees to pay the airline the fluctuating market price for the same quantity. If the market price goes above the fixed price, the financial institution pays the difference to the airline, effectively subsidizing the airline's fuel costs. If the market price falls below the fixed price, the airline pays the difference to the financial institution.

  Explanation: This illustrates a swap used to manage commodity price risk, allowing a company to lock in a future price for a raw material, thereby stabilizing its costs and protecting against market volatility.