Formal Notice of Default: The Letter That Comes First

A missed payment is not yet a claim. In most of continental Europe and in Brazil the debt sits there quietly, accruing nothing, until you do something about it. That something is usually a letter.

Send it and interest starts running. Skip it and, in many cases, you cannot claim damages at all. The termination clause you negotiated so carefully stays inert, because nearly every system makes termination conditional on a warning that went unanswered.

Lawyers call this putting the other party in default. German law calls it Verzug. French law calls it mise en demeure. Spanish and Brazilian law both call it mora. Four names, one mechanism. Performance was due, it did not happen, and you said so in a form you can prove later.

Start with the calendar, because when a date is fixed the letter is often unnecessary.

Brazil states this most compactly. Article 397 of the Civil Code provides that failure to perform a positive and liquidated obligation on its due date places the debtor in default automatically. The sole paragraph adds the other half: where there is no fixed term, default arises through judicial or extrajudicial notice. A date in the contract does the work. No date, and you have to write.

Germany reaches the same place by a different route. Under § 286(1) BGB the debtor falls into Verzug through a reminder given after the debt falls due. Paragraph 2 then lists when no reminder is needed: a time fixed by the calendar, a period calculable from an event, a serious and final refusal to perform, or special circumstances that justify immediate default. Paragraph 3 adds a rule worth memorising. A debtor on a money claim falls into default at the latest thirty days after the debt is due and an invoice has arrived, and against a consumer only if the invoice pointed that consequence out.

Spain leaves less to the calendar. Article 1100 of the Civil Code puts a party in mora from the moment the creditor demands performance, judicially or extrajudicially. The demand is the default rule, not the exception. Two carve-outs follow: where the obligation or the law says so expressly, and where the timing was clearly a determining reason for making the deal at all.

France sits between the two. Article 1344 allows default to be triggered by a summons or an act containing sufficient interpellation, or, where the contract provides for it, by the mere fact that the obligation has fallen due. That last clause is worth putting into your contracts.

Four elements do the work. Identify the obligation. State what you want. Set a deadline. Say what happens if the deadline passes.

The deadline has to be realistic. German law asks for an angemessene Frist, a reasonable period for performance or cure, and § 323(2) BGB sets out the three cases where you can skip it: a serious and final refusal, a missed date that both sides treated as essential, and defective performance where the circumstances justify immediate withdrawal. Paragraph 3 covers the odd case where a deadline makes no sense at all, and substitutes a formal warning.

France is stricter about wording than most people expect, and this is where notices die. Article 1226 requires the notice to state expressly that if the debtor does not perform, the creditor will be entitled to terminate. Article 1225 goes further where a termination clause exists: the notice produces effect only if it expressly mentions that clause. A perfectly polite letter that omits the reference is worth nothing.

Keep the tone flat. You are building a document that a judge will read years later, not winning an argument today. Facts, figures, dates, and one clear consequence.

There is one more reason to be careful with the deadline. In continuing relationships German law allows termination for cause only after an unsuccessful cure period or an unsuccessful warning. Contracts that run for years are exactly the ones people terminate in a hurry.

The letter matters less than the evidence that it left your hands and reached theirs. Every system has built a channel for this, and they are not interchangeable.

Spain uses the burofax, a Correos product that certifies the exact content of what was sent along with the date and the outcome of delivery. It is worth understanding the limits. Article 22.4 of Law 43/2010 grants a presumption of veracity to the designated operator's handling of notifications from administrative and judicial bodies. A private demand between two companies does not live off that presumption. Its force comes from the certification of content and delivery, which is exactly what article 1100 of the Civil Code asks for.

Brazil offers something stronger, and underused. Under article 160 of Law 6,015/1973 the registry of titles and documents will serve notices on request, and by that process notices may be made whenever judicial intervention is not required. Article 161, as amended in 2022, gives registry certificates the same probative value as the original documents, physical or natively digital. That last phrase matters: a document born electronic can carry the same evidentiary weight as paper.

Germany and France rely on registered post with acknowledgment of receipt, and both now accept qualified electronic registered delivery as an equivalent. The practical question is the same everywhere. Can you show, years later, what was sent, when, and to whom?

This is the part most companies get wrong. They send a careful notice by ordinary email and keep nothing but a copy in the sent folder.

Three things follow, and they follow only from the moment the notice takes effect.

Interest comes first. French law is explicit: article 1344-1 provides that a notice to pay a sum of money makes moratory interest run at the legal rate without the creditor having to show any loss. Article 1231-6 says the same thing from the damages side. German law is more generous to business creditors: under § 288 BGB the rate is five percentage points over the base rate, nine points for commercial payment claims, plus a flat forty euros where the debtor is not a consumer. Spain falls back on the legal interest rate under article 1108. Brazil, since the 2024 amendment to article 395, gives the creditor damages, interest, monetary correction and legal fees.

Damages come second. Article 1231 of the French Civil Code states the rule bluntly: unless the failure is definitive, damages are due only if the debtor was first put on notice to perform within a reasonable period. Skip the letter and you have skipped the claim.

Termination comes last, and it is the reason the letter exists. French article 1224 gives three routes out of a contract: a termination clause, a notification where the failure is serious enough, or a court decision. Article 1226 lets a creditor terminate by notification at their own risk, after a notice with a reasonable deadline, and the debtor can challenge it at any time. German law routes withdrawal through § 323 after an unsuccessful deadline. Spain still frames resolution as something a court decrees under article 1124. Brazil draws the sharpest line of all in article 474: an express termination clause operates automatically, while an implied one requires judicial notice.

The pattern holds across all four. Write the clause, then write the letter. Neither works alone. If you are drafting rather than enforcing, our guides on breach of contract and how to write a contract cover the clause side.