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| An Analytical Framework for the Validity of Ipso Facto Clauses
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| CHEN Jingshan,SUN Baoling |
| Civil, Commercial and Economic Law School, China University of Political Science and Law |
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Abstract The validity of ipso facto clauses is a conflicting point between the autonomy of the parties and realization of the goals of the bankruptcy law. The bankruptcy termination clause should be deemed effective in principle considering the new provision Article 580 (2) on “breaching party's right to termination” in China's Civil Code to avoid the deadlocks of contract and the need to respect the autonomy of the parties, except when the relevant bankruptcy administrator has decided to continue to perform the contract according with the relevant procedural conditions and substantive standards. The deprivation clause should be deemed ineffective in principle considering the fact that it would substantially hinder the realization of the goals of the bankruptcy law, except when its design accords with the general exemption rules that may refer to the “fair price” theory, “flawed asset” theory and “good faith” theory in the UK insolvency law. Taking the bankruptcy termination clause and the deprivation clause as general types of ipso facto clauses so as to clarify their validity is an effective measure to optimize the business environment and promote the index of “Resolving Insolvency”.
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Received: 27 August 2020
Published: 15 June 2021
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Corresponding Authors:
CHEN Jingshan
E-mail: jingshan69@hotmail.com
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2021, Vol. 41 
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