How to Write a Contract Default Clause

By Louis Kroeck
Default clauses can be tricky.

PhotoObjects.net/PhotoObjects.net/Getty Images

A contract default clause states what will happen if one of the parties fails to live up to their side of the agreement. Generally a default clause allows the non-breaching party to terminate the contract, execute a specific course of action or request damages based on the default. Most default clauses come into effect when a party fails to make payment by a certain date or fails to perform some type of work or service in a timely manner.

Review all state law related to contract construction and how default clauses are generally construed in your jurisdiction. Knowing the intricacies of contract law is a very daunting task so you may wish to consult an attorney to help you draft the contract.

Consider how your performance on the agreement or how the project you are working on will be affected if the other party breaches the contract. Make a list of potential reasons the other party might breach or potential delays which would be detrimental to the project.

Create a list of potential remedies to the other party's breach of contract. Common remedies include monetary damages, specific performance and the right to bring someone else in to complete the project or agreement.

Draft the contract default clause stating explicit actions which govern when the other party will have defaulted on the contract. Be sure to also include what remedies will be available to the aggrieved party when the other party defaults.

Consider adding a liquidated damages clause to your default clause which will give the non-defaulting party specific monetary relief on top of the other relief granted in the default clause.

About the Author

Louis Kroeck started writing professionally under the direction of Andrew Samtoy from the "Cleveland Sandwich Board" in 2006. Kroeck is an attorney out of Pittsburgh, Pennsylvania specializing in civil litigation, intellectual property law and entertainment law. He has a B.S from the Pennsylvania State University in information science technology and a J.D. from Case Western Reserve University in Cleveland, Ohio.

Cite this Article A tool to create a citation to reference this article Cite this Article