Ipso facto clause

Definition - Noun
: a clause in an agreement stipulating the consequences (as termination of a lease or acceleration of a payment) of the insolvency of one of the parties
An ipso facto clause is invalid under the Bankruptcy Code because a trustee is not bound by any provision or applicable law that is conditioned on the debtor's insolvency.



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Based on Merriam-Webster's Dictionary of Law ©2001.
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