What does a Cross Defaults Clause provide?

• A. A default under any other contract between the lessee and the lessor also constitutes a default under the present lease.
• B. A default under any other contract is deemed cured if the current lease remains in effect.
• C. A breach in a related contract cancels the present lease automatically.
• D. Only defaults related to the equipment trigger a cross default.

Answer: (A)

Cross-default provisions tie risks across multiple agreements with the same counterparty. They ensure that when the lessee defaults on any other contract with the lessor, the present lease also default occurs, giving the lessor a right to exercise remedies under the lease even though the breach is outside the lease itself. This is about expanding the default trigger, not about curing other contracts, canceling the lease automatically, or being limited to equipment-related issues. It makes the lease respond to broader financial or performance problems the lessee may have with the same counterparty.