A cross-default clause is a provision in a contract that allows a party to declare a default if the other party defaults on a separate agreement. This clause is commonly used in loan agreements and other financial contracts to protect the interests of lenders or creditors. If a borrower or debtor defaults on any other loan or obligation, the lender or creditor can declare a default on the loan or agreement in question. This clause provides the lender or creditor with additional security and ensures that they are not at risk of losing their investment if the borrower or debtor defaults on any other obligations.
A cross default clause is a provision in a contract that allows a lender to declare a default on a loan if the borrower defaults on another loan or agreement.
Yes, cross default clauses are generally enforceable in court as long as they are clearly written and do not violate any laws or public policy.
Yes, a cross default clause can be included in various types of contracts, including loan agreements, lease agreements, and bond indentures.
If a cross default clause is triggered, the lender may have the right to accelerate the loan, demand immediate repayment, or take other actions as specified in the contract.
Yes, borrowers can negotiate the terms of a cross-default clause with the lender before signing the contract.
Some jurisdictions may have limitations on the use of cross-default clauses, such as restrictions on the types of obligations that can trigger a default.
Borrowers should carefully consider the potential consequences of a cross-default clause and seek legal advice if necessary before agreeing to its terms.
In some cases, a cross-default clause can be added to an existing contract through an amendment or modification to the original agreement.
Lenders may use other provisions, such as cross-collateralization or cross-acceleration clauses, to protect their interests without using a cross-default clause.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 12th April 2024.
To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.
- Page URL:https://dlssolicitors.com/define/cross-default-clause/
- Modern Language Association (MLA):Cross Default Clause. dlssolicitors.com. DLS Solicitors. May 09 2024 https://dlssolicitors.com/define/cross-default-clause/.
- Chicago Manual of Style (CMS):Cross Default Clause. dlssolicitors.com. DLS Solicitors. https://dlssolicitors.com/define/cross-default-clause/ (accessed: May 09 2024).
- American Psychological Association (APA):Cross Default Clause. dlssolicitors.com. Retrieved May 09 2024, from dlssolicitors.com website: https://dlssolicitors.com/define/cross-default-clause/
Our team of professionals are based in Alderley Edge, Cheshire. We offer clear, specialist legal advice in all matters relating to Family Law, Wills, Trusts, Probate, Lasting Power of Attorney and Court of Protection.
All author posts