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Default
Also called in default, breach.
The condition of having broken an agreement, by missing payments or by breaching any other promise in it, which unlocks the remedies the contract has been holding in reserve.
Drafted with AI assistance. Not yet independently checked. Nobody has verified the claims on this page against a source, so treat the figures and legal points as a starting point rather than as settled, and confirm anything you are about to act on. How we check things.
What it means
This is a defined term, and the definition is the contract's rather than the dictionary's. Monetary default means a payment or remittance did not arrive. Non-monetary default covers everything else the agreement made a promise about.
What follows is acceleration. On a loan, the unpaid principal plus accrued interest becomes immediately due. On a purchase of receivables, the entire uncollected purchased amount becomes due at once, including the portion that is fee rather than funded money. Then the remedies section opens: default fees, collection and attorney costs, enforcement against collateral under Article 9, demand on the guarantor, and in a small number of jurisdictions and older documents, entry of a confessed judgment.
Notice and cure rights exist only if the document grants them. There is no general legal right to be warned before a commercial creditor accelerates, and many short-term agreements grant none.
Where this one catches people
You can be fully current on money and still be in default. The clauses that catch people are the ones prohibiting additional financing, requiring the same bank account and processor, requiring insurance, and requiring periodic statements. A funder that wants out of a deal, or wants leverage in a renewal conversation, reads that list rather than the payment history.
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Default — common questions
What does default mean?
The condition of having broken an agreement, by missing payments or by breaching any other promise in it, which unlocks the remedies the contract has been holding in reserve.
Where does default catch people out?
You can be fully current on money and still be in default. The clauses that catch people are the ones prohibiting additional financing, requiring the same bank account and processor, requiring insurance, and requiring periodic statements. A funder that wants out of a deal, or wants leverage in a renewal conversation, reads that list rather than the payment history.
Is default the same as an interest rate?
Default is defined above; if you are comparing it against a rate, check whether the two measures share a time dimension before you put them side by side.
Which products does default apply to?
It is not specific to one product — it appears across the market.
Is there a worked example of default?
Not on this entry. Where a term is arithmetic, the arithmetic is shown; this one is not primarily a calculation.
What else should I read alongside default?
Acceleration clause, Cure period, Event of default, Forbearance, Personal guarantee.
Has this definition been checked?
Not yet. This entry is drafted and live, and the notice at the top says so. Confirm anything you are about to act on.
Is this legal advice?
No. It is a definition. What a clause does in your contract, in your state, is a question for a lawyer licensed where you are.
Can I suggest a term?
Yes — [email protected]. The glossary grows from what people are actually shown in contracts.