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. The burden of establishing lack of good faith is on the party against which the power has been exercised.
HISTORY: 1962 Code Section 10.1-208; 1966 (54) 2716; former 1976 Code Section 36-1-208; 2014 Act No. 213 (S.343), Section 1, eff October 1, 2014.
OFFICIAL COMMENTS
Source: Former Section 1-208.
Changes from former law: Except for minor stylistic changes, this section is identical to former Section 1-208.
1. The common use of acceleration clauses in many transactions governed by the Uniform Commercial Code, including sales of goods on credit, notes payable at a definite time, and secured transactions, raises an issue as to the effect to be given to a clause that seemingly grants the power to accelerate at the whim and caprice of one party. This section is intended to make clear that despite language that might be so construed and which further might be held to make the agreement void as against public policy or to make the contract illusory or too indefinite for enforcement, the option is to be exercised only in the good faith belief that the prospect of payment or performance is impaired.
Obviously this section has no application to demand instruments or obligations whose very nature permits call at any time with or without reason. This section applies only to an obligation of payment or performance which in the first instance is due at a future date.
Editor's Note
2014 Act No. 213, Section 51, provides as follows:
"SECTION 51. This act becomes effective on October 1, 2014. It applies to transactions entered into and events occurring after that date."
Structure South Carolina Code of Laws
Chapter 1 - Commercial Code - General Provisions
Section 36-1-101. Short title.
Section 36-1-102. Scope of chapter.
Section 36-1-104. Construction against implicit repeal.
Section 36-1-105. Severability.
Section 36-1-106. Use of singular and plural; gender.
Section 36-1-107. Section captions.
Section 36-1-108. Relation to Electronic Signatures in Global and National Commerce Act.
Section 36-1-109. Omitted by 2014 Act No. 213, Section 1, eff October 1, 2014.
Section 36-1-201. General definitions.
Section 36-1-202. Notice; knowledge.
Section 36-1-203. Lease distinguished from security interest.
Section 36-1-205. Reasonable time; seasonableness.
Section 36-1-206. Presumptions.
Section 36-1-207. Omitted by 2014 Act No. 213, Section 1, eff October 1, 2014.
Section 36-1-208. Omitted by 2014 Act No. 213, Section 1, eff October 1, 2014.
Section 36-1-301. Territorial applicability; parties' power to choose applicable law.
Section 36-1-302. Variation by agreement.
Section 36-1-303. Course of performance, course of dealing, and usage of trade.
Section 36-1-304. Obligation of good faith.
Section 36-1-305. Remedies to be liberally administered.
Section 36-1-306. Waiver or renunciation of claim or right after breach.
Section 36-1-307. Prima facie evidence by third-party documents.
Section 36-1-308. Performance or acceptance under reservation of rights.