ipso facto clause

noun

Legal Definition of ipso facto clause

: 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

Note: 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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