Failure to pay

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The classic event of default in a financial contract. There is no more profound indication that you may be unable to honour your obligations to pay a sum of money that the fact you have actually not done so.

Contrast with a failure to deliver which in some contracts is tantamount in outrage to a failure to pay, but in others it is just one of those things that we accept, sort out, and move on with. For example, stock lending transactions, where a failure to lend Securities, or return Securities or Collateral, might be just one of those things: the result of ordinary market fluctuations, where settlement failures are common, and one often relies on someone else — or a chain of someone elses — settling the necessary Securities into you so you can settle them to your loan counterparty.

See also

• credit mitigation
• Failure to pay - ISDA provision
• event of default
• Failure to pay under the 2010 GMSLA, mini close-out and all that good stuff.