Contract law default

Default occurs if a debtor fails to fulfil the contract at the agreed time, place and in the agreed manner (debtor default), or if the creditor does not accept the service offered by the debtor at the agreed time, place and in the agreed manner (creditor default).

Payment default occurs if the creditor (contractor/vendor) has fulfilled its performance in accordance with the contract but the debtor (contracting party/purchaser) does not meet the contractual or statutory payment deadline.

The due date for a payment for service is generally based on the contractual agreement. If nothing is specified in the contract, payment for service is usually due as soon as the service has been performed.

If the customer defaults i.e. if he does not pay by the due date, the creditor is entitled to demand default interest from the day following the due date. If no default interest is stipulated in the contract, statutory interest may be charged.

For consumer transactions (i.e. between traders and consumers) or for transactions between private individuals, a statutory default interest rate of 4 per cent per year applies. For transactions between traders (or traders and legal entities under public law, such as the federal government, the federal states ("Länder") or municipalities), a statutory default interest rate of 9.2 per cent above the base rate applies.

There is no legal requirement to send a reminder before taking legal action (e.g. a lawsuit).

Detailed information on the judicial reminder procedure, as well as on the topics "I want to take someone to court"German text and "I am being taken to court"German text can be found at

Translated by the European Commission
Last update: 25 January 2021

Responsible for the content: Federal Ministry of Justice

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