What is an acceleration covenant?

An acceleration clause —or acceleration covenant— in the law of contracts, is a term that fully matures the performance due from a party upon a breach of the contract. Such clauses are most prevalent in mortgages and similar contracts to purchase real estate in installments. (https://www.law.cornell.edu/wex/acceleration_clause, cited in Acceleration clause. From Wikipedia, the free encyclopedia. https://en.wikipedia.org/wiki/Acceleration_clause)

It has long been settled that an acceleration clause is valid and produces legal effects. In the case at bench, the promissory note explicitly stated that default in any of the installments shall make the entire obligation due and demandable even without notice or demand. Thus, KT Construction was erroneous in saying that PSBank's complaint was premature on the ground that the loan was due only on October 12, 2011. KT Construction's entire loan obligation became due and demandable when it failed to pay an installment pursuant to the acceleration clause. (KT Construction v. PSBank, G.R. No. 228435, June 21, 2017, citing Premiere Development Bank v. Central Surety & Insurance Company, Inc., 598 Phil. 827, 849, 2009)Suppose, for example, the contract was for A to purchase Blackacre from B for $100,000, to be paid in 5 monthly installments of $20,000. If A makes the first two payments, but fails to make the third payment, an acceleration clause would require that A must immediately pay B the entire balance of $60,000, or lose his right to purchase Blackacre (without getting a refund of his $40,000).

An example of an acceleration clause is examined in the 1971 Rhode Island Supreme Court case of Scullian v. Petrucci: There, the clause stated: "In the event Purchaser defaults on any payment or fails to comply with any condition of this contract [...] the full amount shall be immediately due and payable[...]". The court in that case found that the language of the clause required that default on the payment triggered the statute of limitations for the clause to be enforced. (Scullian v. Petrucci, 276 A.2d 277, 108 R.I. 406, R.I., 1971, cited in Acceleration clause. From Wikipedia, the free encyclopedia. https://en.wikipedia.org/wiki/Acceleration_clause)

Without the inclusion of an acceleration clause in a tenants standard lease, the right for the landlord to commence a lawsuit against the tenant for damages will amass upon the lease termination. (http://www.lawjournalnewsletters.com/sites/lawjournalnewsletters/2017/06/01/five-secrets-to-drafting-an-effective-default-lease, cited in Acceleration clause. From Wikipedia, the free encyclopedia. https://en.wikipedia.org/wiki/Acceleration_clause)