Alice Johnson issued a note payable over 24 equal monthly installments.The note contained a provision making the entire balance due immediately if Alice defaulted on two consecutive installments.The note contained:
A) an acceleration clause.
B) a liquidated damages provision.
C) a guarantee of prompt payment.
D) a contingent executory payment.
E) a prepayment clause.

Question

Quizplus · Accepted Answer

The provision in the note that makes the entire balance due immediately if Alice defaults on two consecutive installments is known as an acceleration clause. This clause allows the lender to "accelerate" the due date of the entire loan if the borrower fails to make timely payments.

Alice Johnson Issued a Note Payable Over 24 Equal Monthly