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Ipso Facto Clause

ipso facto clause n

: 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.


Source: Merriam-Webster's Dictionary of Law ©1996. Merriam-Webster, Incorporated. Published under license with Merriam-Webster, Incorporated.