What is an acceleration clause in an installment sale contract?

An acceleration clause in an installment sale contract is indeed a provision that allows the lender or seller to demand immediate payment of the full remaining balance upon the occurrence of a specified event. This can often include situations such as the buyer defaulting on payments, declaring bankruptcy, or violating terms of the contract. The purpose of this clause is to protect the seller’s interests by providing them with a mechanism to recover the full amount owed without having to wait until the end of the installment period. When this clause is invoked, it can significantly impact the buyer's financial obligations, compelling immediate action to avoid legal consequences or further financial penalties.

While other options may touch on aspects of contractual agreements, they do not accurately define the role or intent of an acceleration clause in the context of installment sales.