Can my contract say I may terminate if the contractor becomes insolvent?
Yes, but with a statutory limit. Section 440 of the Insolvency, Restructuring and Dissolution Act stops a party from terminating a contract only because the company has entered judicial management or certain scheme proceedings, or is insolvent, while those proceedings run. It applies to contracts made on or after 30 July 2020. The section's definition of proceedings does not include winding up, and it does not prevent termination for real defaults such as abandonment or failure to proceed. Take advice on the precise ground you rely on.
From the RRD Field Guide, checked against the sources cited in Contractor Insolvency in Singapore: How Owners Protect Themselves If the Contractor Goes Bust. General information, not advice for your project.
The fuller picture
If your contractor becomes insolvent, the money you have not yet paid is your main protection. Pay only against work done, hold a performance bond and check its expiry, keep the right to terminate and step in, and use SOPA section 24 to pay unpaid subcontractors directly where needed. Anything the insolvent contractor still owes you becomes a proof of debt in its liquidation, usually recovered at a fraction.
More questions on this topic
- My contractor has stopped work and is not answering. What should I do first?
- Can I call the performance bond if the contractor goes into liquidation?
- What is SOPA section 24 and how does it help an owner?
- How do I claim money from a contractor that is in liquidation?
- How much deposit should I pay a renovation or fit-out contractor?
- What happened with Greatearth in 2021?
- Will a replacement contractor cost more than the original?