Default means a failure to perform an obligation when performance is due under the governing agreement or law.
Why It Matters
Default matters because creditor rights often depend on whether a triggering failure has occurred. Once default happens, the contract or governing law may allow acceleration, repossession, foreclosure, or other remedies.
Where It Appears
Default appears in business loans, secured transactions, payment obligations, bankruptcy-related disputes, and commercial contracts.
Practical Example
A borrower misses required payments under a financing agreement. If the agreement defines that failure as a default, the lender may gain additional enforcement rights.
How It Differs From Nearby Terms
Breach of contract is a broader concept covering many contractual failures. Default often refers more specifically to a triggering failure under financing or payment obligations. Default judgment is different because it concerns court procedure rather than commercial nonperformance.
Related Terms
Knowledge Check
- What is default in plain language? It is a failure to perform a required obligation when due.
- Why is default important in commercial law? Because it often triggers stronger creditor remedies and enforcement rights.