Other defaults: Overview, definition, and example
What are other defaults?
"Other defaults" refer to situations where a party fails to fulfill its obligations under a contract, not necessarily due to the more common or specified breaches, but through actions or inactions that may still constitute a failure to meet the terms of the agreement. These defaults may include failure to meet deadlines, failure to cooperate in good faith, or non-compliance with additional terms that were not explicitly covered under primary default clauses. "Other defaults" are typically catch-all provisions in contracts designed to address circumstances that fall outside specific default triggers but still have an impact on the execution of the agreement.
Why are other defaults important?
Other defaults are important because they offer flexibility in a contract to address any failure to comply with the terms of the agreement, even when the issue isn't explicitly categorized under a specific breach clause. Including provisions for other defaults helps ensure that a party cannot avoid liability simply because their failure doesn’t fit a previously outlined default condition. These clauses provide a safeguard against a wide range of potential non-compliance issues, ensuring that the contract remains enforceable and that both parties are held accountable for their broader obligations under the agreement.
Understanding other defaults through an example
Imagine a business enters into a supply agreement with a vendor, where the vendor is obligated to deliver goods by a certain date. The contract specifies that failure to deliver on time constitutes a default. However, the vendor also fails to provide regular updates on the status of the shipment, which wasn’t explicitly mentioned in the contract as a default condition. In this case, the failure to keep the buyer informed could be considered an "other default," even though it wasn't specifically categorized as a breach of contract in the agreement.
In another example, a company agrees to provide quarterly financial reports to its investors by a specific date. While the contract specifies what constitutes a default for late reports, the company fails to meet other minor administrative duties such as filing routine forms with regulatory agencies. This could also be addressed under the "other defaults" clause, even though it’s not a major breach of the main terms of the contract.
An example of an "other defaults" clause
Here’s how an "other defaults" clause might look in a contract:
“In addition to the specific defaults outlined above, any failure by either Party to fulfill any other obligation under this Agreement, including but not limited to failure to perform administrative or auxiliary duties, failure to provide necessary documentation, or failure to cooperate in good faith, shall be considered an event of default, subject to the remedies outlined herein.”
Conclusion
"Other defaults" clauses are important provisions that ensure all failures to meet contractual obligations are addressed, even if they do not fall under more specific default categories. By including a clause for other defaults, both parties are given a framework for addressing various non-compliance issues, ensuring the contract remains enforceable and holding both parties accountable for a broader range of obligations. These clauses protect both sides by preventing any party from escaping liability through a technicality or omission.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.