An important change in law arising from the raft of
recent Insolvency reforms concerns enforcement of 'ipso
facto' clauses in contracts. As the change will impact on how
you contract and do business with your customers, it is important
to both understand the change and put measures in place to deal
with it.
The "Ipso whatso" clause?
Ipso facto clauses are commonly found throughout both commercial
and construction contracts. These allow a party ('party 1')
to terminate or modify a contract on the occurrence of a trigger
event, or can, for example, provide for termination of a contract
when a trigger event occurs.
Often the trigger is an 'Insolvency Event'. Generally
what constitutes an 'Insolvency Event' will be broadly
defined within the contract, but could be (for example) the
appointment of an Administrator, a liquidator, or a Receiver or
Controller to the other party ('party 2'). These clauses
are used to provide some risk protection for a party against
