Event Of Default

AAA

DEFINITION of 'Event Of Default'

An action or circumstance that causes a lender to demand full repayment of an outstanding balance sooner than it was originally due. In many agreements, the lender will include a contract provision covering events of default to protect itself in case it appears that the borrower will not be able to or does not intend to continue repaying the loan in the future. An event of default enables the lender to seize any collateral that has been pledged and sell it to recoup the loan.

INVESTOPEDIA EXPLAINS 'Event Of Default'

Occurrences that may trigger an event of default include non-repayment of a loan at maturity, breach of contract and declaration of bankruptcy. Event of default clauses can be included not only in loan and lease agreements, but also in business agreements such as joint ventures and partnerships. Such a clause can allow the non-defaulting parties to exit a broken agreement.

RELATED TERMS
  1. Delinquent Mortgage

    A mortgage for which the borrower has failed to make payments ...
  2. Acceleration Clause

    A contract provision that allows a lender to require a borrower ...
  3. Reperforming Loan - RPL

    A loan on which the borrower was behind on payments (delinquent) ...
  4. Default Rate

    This rate can be used in reference to two main things: 1. The ...
  5. Bankruptcy

    A legal proceeding involving a person or business that is unable ...
  6. Cross Default

    A provisions in a bond indenture or loan agreement that puts ...
Related Articles
  1. Spotting Companies In Financial Distress
    Personal Finance

    Spotting Companies In Financial Distress

  2. Bankruptcy Protection For Your Accounts
    Retirement

    Bankruptcy Protection For Your Accounts

  3. Common Clues Of Financial Statement ...
    Retirement

    Common Clues Of Financial Statement ...

  4. An Overview Of Corporate Bankruptcy
    Bonds & Fixed Income

    An Overview Of Corporate Bankruptcy

comments powered by Disqus
Hot Definitions
  1. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. ...
  2. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  3. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  4. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  5. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  6. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
Trading Center