| Commentary

23.6 Termination on insolvency

| Commentary

23.6 Termination on insolvency

Commercial agreements often include a provision to allow a party to terminate the agreement if another party becomes insolvent or bankrupt, or is liquidated. Such provisions are often regarded as classic ‘boilerplate’ clauses, which require little thought. However, there are some commercial issues that may need to be considered, including the following points:

  1. (a)

        If a company is liquidated, the liquidator has a statutory right to reject ‘onerous contracts’. This right cannot be overridden by contract terms. In most cases, this is simply unavoidable, and there may be very little point in trying to address the

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