How to Test a Supplier Ipso Facto Trigger Against Section 233B

Test the supplier’s ipso facto trigger — wording that ends the supply because the customer is insolvent — before you book the contract as ended or hold the next delivery for the old invoice. Section 233B of the Insolvency Act 1986 makes those words cease to have effect, and only to that extent, when a company customer enters a listed procedure. Write the words, the procedure, the unused right, and who must consent.

On this termination block, do not treat the automatic sentence as the end of the supply. Holding the next delivery until the old invoice is paid is a separate decision. That sentence does not decide the delivery.

Disclaimer: Checkory provides AI support, not legal advice. Consult a qualified lawyer for binding decisions.

Why test this supplier trigger before you book the contract as ended?

The trigger has to be marked before the contract is booked as ended, and a hold for the old invoice is a separate mark. An automatic sentence that applies because the customer entered administration settles neither point. Write the marks, then take the delivery decision to an insolvency solicitor.

Administration here is 12 October 2026, the next delivery is 22 October 2026, and the old invoice is £8,640. For example, holding 200 kettles until that invoice is paid ignores section 233B. Do not book the contract as ended on that hold.

Are you the supplier of goods or services to the company?

You are inside section 233B only if this is a contract for the supply of goods or services to a company, and you are the supplier. If the insolvent party is the supplier, stop. The customer may still use a contractual insolvency trigger. Start with that split.

It is a goods supply, dated 4 March 2026, under English law, in the courts of England and Wales, to a company. Section 14 applies from 26 June 2020, including earlier contracts. Pinsent Masons, on 6 March 2024, leaves a licence-only or lease-only paper unclear. Do not paste this test onto a Northern Ireland company: the extent is England and Wales and Scotland.

Which insolvency words cease, and only to that extent?

Those words cease to have effect, and only to that extent. Section 233B(3) catches termination, or any other thing, because the company enters the procedure. Leave every other sentence in place.

In practice, write “ceased to that extent” and do not strike the whole clause. Leave a statutory demand, a notice of intention, and a winding-up petition unmarked. Stevens & Bolton, on 28 March 2023, also leaves a scheme of arrangement and a fixed-charge receiver off the list.

Administration on 12 October 2026 is section 233B(2)(b). Also listed: a Part A1 moratorium, a non-succession administrative receiver or provisional liquidator, a Part 1 voluntary arrangement, liquidation, and a section 901C order. The explanatory notes use a payment-terms change for “any other thing”.

When did the unused termination right arise?

Match the right’s date to the day the insolvency period started. Section 233B(4) bars a termination right that arose before that start and was not used. A right that arises only afterwards is a different entitlement.

£8,640 fell due on 25 September 2026, the unused right arose on 2 October 2026, and administration began on 12 October 2026. Blaser Mills, on 21 July 2025, says that right had to be used before the procedure. Lewis Silkin, on 29 June 2020, says a later breach can still be used.

Who must consent, and what stays off the next delivery?

Name who must consent, and keep the old charge off the next delivery. In administration that person is the administrator. The old invoice, and a guarantee from another statutory list, are not the price of goods not yet delivered.

Section 233B(5)(a) and subsection (9) name the administrator, not the customer. Company consent under (5)(b) covers a moratorium, a voluntary arrangement, or a section 901C order. Subsection (5)(c) is court permission on hardship, which the statute does not define. The withdrawn GOV.UK factsheet, withdrawn on 22 February 2023, gives the supplier’s own solvency as an example. Do not draft the application. A later procedure is tested again under subsection (5).

Section 233B(7) bars using the £8,640 as the price of the 22 October kettles, £6,400. Paragraph 36 does not require a personal guarantee from the office-holder or the directors. Section 233(2)(a) allows that guarantee only for listed utilities and IT, not these kettles. A credit-form guarantee is a different document: see the personal-guarantee review.

Has the small-supplier window closed on this procedure?

Close the small-supplier window on the procedure date, then tick a financial-services exclusion only if a listed paragraph matches. Section 15 ended that window on 30 June 2021. A headcount under 50 does not reopen it, and a bank payment for ordinary goods is not Schedule 4ZZA.

SI 2021/375 set that end, so 12 October 2026 falls outside it. Two of three was the test: turnover £10.2 million, balance sheet £5.1 million, and 50 employees. Fourteen employees meet only one of those three.

Tick Schedule 4ZZA only for paragraphs 3 to 11, a listed activity, for example a deposit-taker, or paragraphs 13 to 18: a financial contract, securities financing, a derivative, a spot contract, a capital-market arrangement, or a public-private partnership. A bank payment for kettles is neither. Mark, in order: gateway, ceased words, procedure, unused right, consent, old invoice, exemption closed, exclusion unticked.

The log stops on those marks. Do not serve a termination notice from this page. Do not describe the delivery as safe to stop or safe to ship. Take the log to an insolvency solicitor before the next supply.

A convenience right is a different test, and this paper has none: use the convenience and cause review. Blaser Mills takes the view that a free option should remain usable if notice is kept and supply continues. A notice-and-cure period, suspension for non-payment, and step-in are different tests.

Force majeure is a different test. Retention of title on goods already delivered is a different claim: Lewis Silkin, on 3 February 2023, says raise it with the office-holder. A credit-form guarantee and a construction pay less notice are different tests. A first-pass — the first machine pass that extracts clauses before a human reads every page — does not decide that the contract has ended. Upload the file on document analysis.