Termination rights and insolvency events

Changes to the Corporations Act 2001 (Cth) (Corps Act), effective 1 July 2018, may affect the right of an owner to suspend or terminate a contract due to various insolvency-related trigger events. The intent of these changes is that this will potentially increase the chance of companies trading their way out of trouble or finding a suitable purchaser.

Under the ABIC contracts, Section Q ‘Termination of engagement’ has long provided the parties the ability to immediately terminate a contract if a broadly-defined *insolvency event occurs. However, the Corps Act changes may now affect a party’s termination ability and how you administer a construction contract.