Chandos Construction V Deloitte Restructuring: How To Draft Construction Contracts To Avoid The Anti-deprivation Rule

In Chandos Construction Ltd v Deloitte Restructuring Inc¹ [Chandos], the majority of the Supreme Court of Canada (the "SCC") reaffirmed the common law anti-deprivation rule in Canada. The anti-deprivation rule voids contractual terms which apply upon a party's insolvency and bankruptcy where the clause removes value from an insolvent person's estate that would otherwise have been available for the insolvent person's creditors. Anyone entering into construction contracts should avoid contractual provisions which may trigger the anti-deprivation rule and understand that if they are already in a contract, they may not be enforceable. However, despite the anti-deprivation rule, there are contractual provisions that can be used to protect parties where their contracting counterpart becomes insolvent or bankrupt.