diff --git a/package-lock.json b/package-lock.json
index aa7cef85b..86b31daf8 100644
--- a/package-lock.json
+++ b/package-lock.json
@@ -1,12 +1,12 @@
 {
   "name": "@sinclair/typebox",
-  "version": "0.33.6",
+  "version": "0.33.7",
   "lockfileVersion": 2,
   "requires": true,
   "packages": {
     "": {
       "name": "@sinclair/typebox",
-      "version": "0.33.6",
+      "version": "0.33.7",
       "license": "MIT",
       "devDependencies": {
         "@arethetypeswrong/cli": "^0.13.2",
diff --git a/package.json b/package.json
index 299a5e2dd..aae8d9de3 100644
--- a/package.json
+++ b/package.json
@@ -1,6 +1,6 @@
 {
   "name": "@sinclair/typebox",
-  "version": "0.33.6",
+  "version": "0.33.7",
   "description": "Json Schema Type Builder with Static Type Resolution for TypeScript",
   "keywords": [
     "typescript",
diff --git a/src/value/default/default.ts b/src/value/default/default.ts
index abda4cdd4..27b05f555 100644
--- a/src/value/default/default.ts
+++ b/src/value/default/default.ts
@@ -44,7 +44,7 @@ import type { TUnion } from '../../type/union/index'
 // ------------------------------------------------------------------
 // ValueGuard
 // ------------------------------------------------------------------
-import { IsString, IsObject, IsArray, IsUndefined } from '../guard/index'
+import { IsString, IsObject, IsArray, IsUndefined, HasPropertyKey } from '../guard/index'
 // ------------------------------------------------------------------
 // TypeGuard
 // ------------------------------------------------------------------
@@ -52,8 +52,9 @@ import { IsKind } from '../../type/guard/kind'
 // ------------------------------------------------------------------
 // ValueOrDefault
 // ------------------------------------------------------------------
-function ValueOrDefault(schema: TSchema, value: unknown) {
-  return value === undefined && 'default' in schema ? Clone(schema.default) : value
+function ValueOrDefault(schema: TSchema, value: unknown): unknown {
+  const clone = HasPropertyKey(schema, 'default') ? Clone(schema.default) : undefined
+  return IsUndefined(value) ? clone : IsObject(value) && IsObject(clone) ? Object.assign(clone, value) : value
 }
 // ------------------------------------------------------------------
 // HasDefaultProperty
@@ -81,6 +82,7 @@ function FromIntersect(schema: TIntersect, references: TSchema[], value: unknown
 }
 function FromObject(schema: TObject, references: TSchema[], value: unknown): any {
   const defaulted = ValueOrDefault(schema, value)
+  // return defaulted
   if (!IsObject(defaulted)) return defaulted
   const knownPropertyKeys = Object.getOwnPropertyNames(schema.properties)
   // properties
@@ -90,7 +92,7 @@ function FromObject(schema: TObject, references: TSchema[], value: unknown): any
     // a non assignable property and continue.
     const propertyValue = Visit(schema.properties[key], references, defaulted[key])
     if (IsUndefined(propertyValue)) continue
-    defaulted[key] = propertyValue
+    defaulted[key] = Visit(schema.properties[key], references, defaulted[key])
   }
   // return if not additional properties
   if (!HasDefaultProperty(schema.additionalProperties)) return defaulted
diff --git a/test/runtime/value/default/object.ts b/test/runtime/value/default/object.ts
index ddfad94a6..86a7df19f 100644
--- a/test/runtime/value/default/object.ts
+++ b/test/runtime/value/default/object.ts
@@ -213,19 +213,47 @@ describe('value/default/Object', () => {
   // Traveral: https://github.com/sinclairzx81/typebox/issues/962
   // ----------------------------------------------------------------
   it('Should traverse into an object 1 (initialize)', () => {
-    const Child = Type.Object({ a: Type.String({ default: 'x' }) })
-    const Parent = Type.Object({ child: Child })
-    Assert.IsEqual(Value.Default(Child, {}), { a: 'x' })
-    Assert.IsEqual(Value.Default(Parent, { child: {} }), { child: { a: 'x' } })
+    const Y = Type.Object({ y: Type.String({ default: 'y' }) })
+    const X = Type.Object({ x: Y })
+    Assert.IsEqual(Value.Default(Y, {}), { y: 'y' })
+    Assert.IsEqual(Value.Default(X, { x: {} }), { x: { y: 'y' } })
   })
   it('Should traverse into an object 2 (retain)', () => {
-    const Child = Type.Object({ a: Type.String({ default: 'x' }) })
-    const Parent = Type.Object({ child: Child })
-    Assert.IsEqual(Value.Default(Parent, { child: { a: 1 } }), { child: { a: 1 } })
+    const Y = Type.Object({ y: Type.String({ default: 'y' }) })
+    const X = Type.Object({ x: Y })
+    Assert.IsEqual(Value.Default(X, { x: { y: 1 } }), { x: { y: 1 } })
   })
   it('Should traverse into an object 3 (ignore on undefined)', () => {
-    const Child = Type.Object({ a: Type.String({ default: 'x' }) })
-    const Parent = Type.Object({ child: Child })
-    Assert.IsEqual(Value.Default(Parent, { child: undefined }), { child: undefined })
+    const Y = Type.Object({ y: Type.String({ default: 'y' }) })
+    const X = Type.Object({ x: Y })
+    Assert.IsEqual(Value.Default(X, { x: undefined }), { x: undefined })
+  })
+  // ----------------------------------------------------------------
+  // Exterior Object Defaults
+  // ----------------------------------------------------------------
+  it('Should default exterior into an object 1', () => {
+    const X = Type.Object({ x: Type.String({ default: 1 }) }, { default: {} })
+    const R = Value.Default(X, undefined)
+    Assert.IsEqual(R, { x: 1 })
+  })
+  it('Should default exterior into an object 2', () => {
+    const X = Type.Object({ x: Type.String({ default: 1 }) }, { default: {} })
+    const R = Value.Default(X, {})
+    Assert.IsEqual(R, { x: 1 })
+  })
+  it('Should default exterior into an object 3', () => {
+    const X = Type.Object({ x: Type.String({ default: 1 }) }, { default: {} })
+    const R = Value.Default(X, { y: 3 })
+    Assert.IsEqual(R, { y: 3, x: 1 })
+  })
+  it('Should default exterior into an object 4', () => {
+    const X = Type.Object({ x: Type.String({ default: 1 }) }, { default: {} })
+    const R = Value.Default(X, { y: 3, x: 7 })
+    Assert.IsEqual(R, { y: 3, x: 7 })
+  })
+  it('Should default exterior into an object 5', () => {
+    const X = Type.Object({ x: Type.String({ default: 1 }) }, { default: {} })
+    const R = Value.Default(X, { x: 2 })
+    Assert.IsEqual(R, { x: 2 })
   })
 })