Default Clauses

Default clauses are provisions in a legal or contractual agreement that specify what happens if a party fails to meet their obligations. They set predetermined consequences or conditions to ensure clarity and fairness, reducing the need for further negotiation. For example, if a borrower misses a payment, a default clause might outline late fees or the lender’s right to demand full repayment. These clauses help protect parties by clearly defining actions and remedies in case of non-compliance, ensuring the contract remains effective even if situations change.