Events of Default
Traditionally, in particular in jurisdictions influenced by the German legal doctrine, the concept of “default” has been considered as including three types, namely nonperformance, impossibility of performance and delay in performance. In those jurisdictions, the parties’ freedom to stipulate the meaning of “default” in an agreement is doubted. In the Netherlands, the “open-ended concept of default” under the Cape Town Convention is considered to be significantly different from its Civil Code. In Poland, while a conditional sale and a lease agreement may be flexibly drafted, a registered pledge is strict with regard to the concept of default, since only the monetary claim can be secured by it.
However, other jurisdictions are more generous in upholding the validity of agreements on what constitutes default. Such jurisdictions include Canada (both common law provinces and Quebec), England, Finland, Switzerland and the United States. The English court seems to be the most flexible and maintains the view that the parties to the agreement are the best judge of the commercial fairness.