§ 3289 Contract Interest After Breach

• •If a contract says how much interest you pay when you break it, that rate stays the same until a court says otherwise.
• •If a contract made after 1986 doesn’t say how much interest you pay when you break it, you pay 10% interest per year.
• •This rule doesn’t apply to loans secured by your house (like a mortgage).

You borrow money from a friend and sign a contract saying you’ll pay 5% interest if you’re late paying them back.

If you don’t pay them back on time, you still owe 5% interest until a court decides something different. If the contract didn’t mention interest, you’d owe 10% per year instead.