Contracts usually require a written default notice be given before a party is entitled to exercise any rights arising from the other party’s default.
For example, see general condition 27.1 in the Estate Agents (Contracts) Regulations 2008 (Vic). Note that the regulations sunset on 11 August 2018. See our FAQ about the sunset of the regulations.
A default notice specifies the particulars of the default and gives the offending party 14 days to remedy the default. There are no consequences specified if the default is not remedied but the notice does satisfy the usual contractual obligation to give notice before exercising rights and it may be used to make time of the essence again if such provision has been waived.
A rescission notice contains details of the default but states that unless:
- the default is remedied and
- reasonable costs are paid and
- interest is paid
within the time specified the contract is at an end in accordance with general condition 28. All three components need to be paid. We have seen claims where the default was not properly remedied because costs or interest were not paid.
Where time is still of the essence the rescission notice can be served as part of the default notice. See our FAQ about when will time no longer be of the essence.