SAL Practitioner: Ipso facto clauses in construction contracts - An analysis of section 440 of the Insolvency, Restructuring and Dissolution Act 2018

10 September 2024

Allen & Gledhill Senior Associates Tan Yen Jee and Ng Wei Ying contributed an article titled “Ipso facto clauses in construction contracts - An analysis of section 440 of the Insolvency, Restructuring and Dissolution Act 2018” to SAL Practitioner, published by the Singapore Academy of Law.

Construction contracts commonly provide that a contractor’s insolvency or the commencement of restructuring proceedings in respect of the contractor may give rise to the employer’s entitlement to exercise certain rights under the contract, including the right to terminate the contractor’s employment. Most construction contracts also require the contractor to furnish an on-demand performance bond, which the employer can call on without proof of default. This arguably allows the employer to call on the on-demand performance bond in the event that the contractor is undergoing restructuring proceedings or is insolvent at the material time. This article explores the impact of section 440 of the Insolvency, Restructuring and Dissolution Act 2018 (“IRDA”) in respect of the aforementioned scenarios, and discusses some practical tips which can be considered to navigate section 440 of the IRDA.