Formal Notice of Default in Switzerland: Form and Effects

Conditions (art. 102 CO)

The obligation must be due. Without a fixed term, default requires a demand from the creditor (art. 102 para. 1 CO). With a fixed term agreed by both parties, default is automatic at the due date (art. 102 para. 2 CO).

Form

Swiss law requires no particular form. May be written, oral or by conclusive act. Written registered mail recommended for evidence. Must contain a clear demand to perform. No need to fix an additional deadline at this stage (that comes under art. 107 CO for contract termination).

Effects

Default Interest (art. 104 CO)

5% per annum for monetary obligations (art. 104 para. 1 CO). Higher contractual rate continues to apply (art. 104 para. 2 CO). Additional damages possible if loss exceeds interest (art. 106 CO).

Aggravated Liability (art. 103 CO)

After default, the debtor is liable for all damage from delay and fortuitous events, unless proving the delay is not causal. Before default: liable only for fault. After: liable even for unforeseeable events.

Transfer of Risk

In sales, debtor's default may transfer the risk of loss.

Creditor's Default (art. 91-95 CO)

When the creditor refuses without legitimate reason to accept the offered performance (art. 91 CO), the debtor may deposit the thing (art. 92 CO) or in some cases withdraw from the contract.

Default vs Additional Deadline

Important distinction: default (art. 102 CO) establishes the delay and triggers its effects. The additional deadline (art. 107 CO) is a subsequent step required if the creditor wishes to terminate the contract.