A Twist In Terminating German Commercial Agreements

Law360, New York (May 21, 2013, 7:59 PM EDT) -- Commercial agreements usually provide for extraordinary termination rights or even automatic cancellation in the case of insolvency of one of the parties. Such a cancellation right may, however, contradict the general principles of German insolvency law.

Regarding ongoing agreements, the insolvency administrator has a statutory choice to either continue or to terminate such an agreement pursuant to Sec. 103 of the German Insolvency Code (Insolvenzordnung — “InsO”). If prompted, the administrator has to exercise its right of choice without undue delay. Any provision excluding or limiting...
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