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UCC 1-309 (What It Is And Why It’s Important: All You Need To Know)

Looking for UCC 1-309?

What does the option to accelerate at will mean?

Why is it important?

Keep reading as I have gathered exactly the information that you need!

Let me explain to you what Uniform Commercial Code 1 309 entails and why it’s so important!

Are you ready?

Let’s get started!

What Is UCC 1-309

UCC 1-309 refers to Section 1-309 of the Uniform Commercial Code titled “Option to Accelerate at Will”.

Under UCC Section 1-309, the notion of option to accelerate at will means that a party may accelerate the payment, demand performance, require collateral, or ask for additional collateral at will when the party deems itself insecure and believes that getting paid or the possibility of receiving performance under the contract is impaired.

Section 1-309 UCC states that the option to accelerate at will is:

A term providing that one party or that party’s successor in interest may accelerate payment or performance or require collateral or additional collateral “at will” or when the party “deems itself insecure,” or words of similar import, means that the party has power to do so only if that party in good faith believes that the prospect of payment or performance is impaired.
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Provision 1-309 replaces the old Section 1-208 of the Uniform Commercial Code.

The option to accelerate at will is used in many types of contracts governed by the Uniform Commercial Code.

You’ll commonly see the acceleration clause in:

  • Sale of goods on credit
  • Notes payable 
  • Secured transactions 

The objective is to allow a contracting party (a lender for example) to accelerate payment or performance of the contract if, in good faith, it considers that the prospect of receiving payment or performance is impaired.

When the right to accelerate payment at will is exercised in good faith and in a reasonable manner, it will be enforceable.

However, if a contracting party accelerates payment unreasonably, or the contract language is too broad, the enforcement of an acceleration clause can be challenged in court.

UCC 1 309 Takeaways 

So there you have it folks!

What is the legal meaning of UCC § 1-309.

In essence, under Section 1 309 UCC, a contracting party can have an option to accelerate payment or performance of contract “at will” when that party feels insecure or when the other party defaults on the terms of the contract.

There are many types of contracts where acceleration clauses are used (or options to accelerated at will) allowing a contracting party to demand the performance of all of the other party’s contractual obligations or receive full payment.

I hope I was able to explain to you what UCC 1-309 is and why it’s important.

If you need particular legal advice on UCC 1-309, be sure to consult a qualified attorney to evaluate the circumstances of your case.

This article is intended to give you a general idea relating to how UCC 1-309 works.

Good luck!

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Now, let’s look at a summary of our findings.

Understanding UCC 1-309

  • UCC Sec 1-309 is a provision of the Uniform Commercial Code titled Option to Accelerate at Will
  • This means that a party to a contract governed by the UCC can include an option allowing it to accelerate payment, performance, or ask for a collateral or additional collateral when it “deems itself insecure”
  • In other words, if the other contracting party defaults on contractual obligations or a party believes, in good faith, that the other party may default or the performance of the contractual obligations are impaired, it can exercise its option to accelerate at will
  • Acceleration clauses are used in many types of contracts particularly in when goods are sold on credit or in the context of secured transactions 
Acceleration clause 
Contract law
Bilateral contract 
Binding contract 
Breach of contract 
Contract consideration law
Contract legality 
Contract of adhesion 
Contractee definition
Convertible note
Illusory contract
Illusory promise
Illusory trust 
Legal documents 
Promisee definition 
Promisor definition 
Reservation of rights
Right to accelerate 
Secured transactions 
Unilateral contract
Unilateral mistake
Without consideration 
Without prejudice
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UCC 1 103
UCC 1 201
UCC 1 207
UCC 1 305
UCC 1 307
UCC 1 308
UCC 2 202
UCC 2 207
UCC 2 204
UCC 2 209
UCC 2 302
UCC 2 314
UCC 2 403
UCC 9 102
Article 1 UCC
Article 2 UCC
Article 3 UCC
Article 9 UCC
Author
Editorial Staff
Hello Nation! I'm a lawyer by trade and an entrepreneur by spirit. I specialize in law, business, marketing, and technology (and love it!). I'm an expert SEO and content marketer where I deeply enjoy writing content in highly competitive fields. On this blog, I share my experiences, knowledge, and provide you with golden nuggets of useful information. Enjoy!

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