Bruce agrees to buy Joe's ranch. They draw up a note, under which Bruce is to pay Joe in three installments, each payable on a specified date. Joe has concerns about Bruce's ability to pay on time, so he insists that the note include an acceleration clause. Such a clause would allow Joe to:
A) accelerate the sale of the ranch.
B) demand payment of the entire amount Bruce owes him if a certain event occurs.
C) extend the date of maturity on the note until a certain date in the future.
D) accelerate the statute of limitations in a case involving negotiable instruments

Question

Quizplus · Accepted Answer

An acceleration clause allows the lender (Joe in this case) to demand immediate payment of the entire outstanding balance if the borrower (Bruce) fails to meet certain conditions, such as defaulting on a payment or becoming insolvent. This gives the lender greater protection and faster access to their money in case of any potential default or financial issues. Option A is not a valid interpretation of an acceleration clause. Option C is closer to a "maturity extension" clause rather than an acceleration clause. Option D is not relevant to this scenario as it refers to a legal provision relating to the time period within which a plaintiff must file a lawsuit.

Bruce Agrees to Buy Joe's Ranch