Customer contracts and insolvency – Suppliers beware!

There has been a recent change to insolvency law which, broadly, prevents suppliers from stopping supplies of goods and services because a customer has suffered an insolvency event.

The following protections are provided to customers under the new law:

• contracts can’t be terminated solely because the customer has suffered an insolvency event

• suppliers can’t take any other steps against the customer where the trigger to that action is the customer’s insolvency (e.g. varying payment terms)

• suppliers can’t terminate the contract for the customer’s pre-insolvency breach, where the entitlement arose but was not exercised before the customer’s insolvency

• suppliers can’t make it a condition of continuing to supply that any outstanding payments are paid

There are various ways in which we can help suppliers mitigate the effect of the new law.

Please contact Andy Brian or Ryan Gracey if you would like to hear more about how we can help.