Tech & Sourcing @ Morgan Lewis

Since the US Supreme Court’s June 21, 2018, decision in South Dakota vs. Wayfair, Inc., many of the 45 sales tax-collecting states have been making moves to put laws and processes in place for tax collections for out-of-state online sales.

More than 1,000 Support Anti-Terrorism by Fostering Effective Technologies Act (SAFETY Act) of 2,002 approvals have been granted by the US Department of Homeland Security (DHS) since the act’s inception.

In Part 1, we discussed how, despite widespread usage, termination in the event of bankruptcy clauses (“ipso facto” clauses) are generally unenforceable pursuant to the bankruptcy code. In this second part, we discuss why these clauses are still prevalent in commercial transactions and the exceptions that allow for enforceability in certain situations.

Practically all commercial transactions, including licenses, services agreements, and supply agreements, contain a provision that triggers termination rights, without notice, to a party whenever the other party files for bankruptcy or experiences other insolvency-related event.