Law Dictionary

ipso facto clause

noun

Legal Definition of ipso facto clause

  1. :  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 —called also bankruptcy clause, ipso facto bankruptcy clause

Additional Notes on ipso facto clause

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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