Notice of Default
Tags: default, in default, in gebreke, ingebrekestelling, notice of default, verzuim.
It is annoying if someone does not fulfil their contractual obligations. Depending on the case, a notice of default is required to take action against this as a creditor.
A notice of default is a letter of formal notice to the debtor whereby he is given a reasonable term to still fulfil his contractual obligations. If the debtor fails to fulfil his contractual obligations within this reasonable period, the debtor is in default. If the debtor is in default, the agreement can be dissolved or compensation can be claimed.
Legal Requirements for Notice of Default
The notice of default must meet a number of requirements for it to be valid:
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The notice of default must always be made in writing. Oral notice of default is not valid.
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The notice of default includes the obligations of the creditor, stating that he has not complied with them. It must be made clear that the debtor is “in default” and the debtor must be given the notice to fulfil the relevant obligations.
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A reasonable period for performance must be stated in the notice of default. A two-week period is generally perceived as reasonable, but may be longer or shorter depending on the type of agreement.
No Notice of Default is Required
In some cases, a notice of default is not required. The most important case is when a fatal deadline has been agreed. After the expiry of this deadline, the debtor is automatically in default and therefore no notice of default is required.
However, when contracting for IT projects, a fatal deadline is not often adopted. One of the characteristics of IT projects is that in most cases they do not meet the given deadline. With this in mind, the judge will not often judge that a deadline is fatal, at least for IT projects.
So it is wise – especially when the agreement concerns an IT project – to send it even if you are not sure that you have to send a notice of default. Then the debtor will be in default anyway and further action can be taken after the commencement of the default.
Does your company or organization need help with drawing up a notice of default or have you received a notice of default? Call or email with lawyer Wouter Dammers!
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