Thinking Of Accelerating? Not So Fast — Check Your Acceleration Clause Before Speeding Ahead To Enforcement

Lenders and their lawyers alike may take it for granted that, where a borrower misses a scheduled payment or some other event of default occurs, the entirety of the borrower's indebtedness will become immediately due and payable. Not so, the Court of Appeal for Ontario confirmed earlier this year, reminding us that acceleration, like the many other remedies enumerated for good measure in those long lists contained in credit and security documents, is a right to be created by agreement between a lender and its borrower.

In SSS Limited¹, the dispute involved brothers who operated several family businesses together. One brother (the Vendor) commenced shareholder oppression proceedings against the other brothers (the Purchasers). The shareholder oppression proceedings were settled on terms providing for the purchase of the Vendor's shares pursuant to a lengthy schedule of monthly payments secured by a share pledge. Those shares were to be held in escrow until all