ACCELERATION CLAUSES – CONTRARY TO PUBLIC POLICY?

Tuesday, January 28, 2014
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At first blush, the judgement of the High Court of the Western Cape Division, Cape Town in Combined Developers v Arun Holdings and Others (6105/2013) may cause concern for lenders as to the enforceability of acceleration clauses in loan agreements. After careful consideration of the judgement, however, the message lenders should rather take away from the decision is rather that given the draconian consequences of an acceleration clause, they should exercise care in the manner and circumstances in which they exercise their rights under such clauses.

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