Free Notice of Contract Default

Each contract is different. Therefore, there is no universal definition for "default." Often, the contract itself will define what events or non-events will be considered a default. In general, a default occurs whenever one party fails to fully meet its obligations, usually to perform a service or to make a payment by the deadline prescribed in the contract.

When one party defaults under a contract for the first time, or in a non-material way, that default does not necessarily entitle the non-defaulting party to immediately terminate the contract. Rather, it is recommended, and often required by the contract, that a notice of default be given and an opportunity to cure. If, after a reasonable period of time, the problem is not corrected, then a notice of termination, due to the default, may be given. (The Notice of Contract Termination document may be used for this purpose.) What constitutes a "reasonable" period of time within which to cure the default varies according to the circumstances. If the cure period is not specified in the contract, then the time period given must be long enough to reasonably allow the defaulting party a chance to correct the problem.

The Notice of Contract Default is a letter which is sent by one contracting party (the "non-defaulting party") to the other party (the "defaulting party"), notifying the defaulting party that it is in default of its obligations under the contract and providing a period of time ("grace period") in which to remedy the problem.

Optimally, the Notice of Contract Default may be successful in prompting the defaulting party to fulfill its obligations under the contract. Otherwise, it will at least serve as evidence that the non-defaulting party provided the required warning to the defaulting party in the event that the contract is later terminated because of the default. Although there may be some situations in which an oral warning may be sufficient, it is highly recommended that every notice of default be provided in writing. The non-defaulting party should send the letter by certified or registered mail and should retain a copy of the letter for its files. Send the letter to the address specified in the contract, if any.

1. The Notice of Contract Default should be signed by the non-defaulting party or that party's authorized representative. A file copy of the letter should be kept.

2. The non-defaulting party should also keep a copy of all other correspondence to and from the defaulting party and should maintain a written summary of all telephone conversations.

3. It is recommended that the notice be delivered or sent by certified mail so that the non-defaulting party can prove that the defaulting party received the notice.