Recent insolvency law reforms in the UK, Singapore and Australia impact upon the ability of a party to a construction contract to terminate it due to the other party’s insolvency.
Construction contracts commonly contain provisions which entitle a party to terminate the contract if the other party becomes insolvent. These provisions are sometimes referred to as “ipso facto” clauses, because it is the fact of insolvency which gives rise to the right to terminate. The purpose of ipso facto clauses is to enable a contracting party to end a contractual relationship where the insolvency of the other party is likely to have a real impact on the counterparty’s performance of its obligations.
The motivation for the recent insolvenc…
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