Okla. Stat. tit. 12A § 2A-109

Current through Laws 2024, c. 453.

Section 2A-109 - Option to accelerate at will

(1) A term providing that one party or his successor in interest may accelerate payment or performance or require collateral or additional collateral "at will" or "when he deems himself insecure" or in words of similar import must be construed to mean that he has power to do so only if he in good faith believes that the prospect of payment or performance is impaired.

(2) With respect to a consumer lease, the burden of establishing good faith under subsection (1) of this section is on the party who exercised the power; otherwise the burden of establishing lack of good faith is on the party against whom the power has been exercised.

Okla. Stat. tit. 12A, § 2A-109

Added by Laws 1988, HB 1683, c. 86, § 9, eff. 11/1/1988.

Oklahoma Code Comment

Unlike some consumer protection laws (see, e.g., 1974 U3C §§ 5.109-5.111) the Oklahoma U3C does not regulate what may be made an event of default or when acceleration of any unpaid amount may occur as a result of default. This provision makes a modest step in that direction. It poses no conflict with any other Oklahoma rule although, dependent on the agreement, there could be overlap with 59 Oklahoma Statutes § 1954(D).

This provision should not be viewed as displacing the principles (applicable to leases as well as to other transactions) of judicial decisions that protect consumers (and others) against "technical defaults". See Holland et al. v. Anderson Brothers Corp., 207 F.2d 830 (l0th Cir.1953) (default asserted based on wrongful dishonor of check); Klingbiel v. Commercial Credit Corp., 439 F.2d 1303 (10th Cir.1971) (strict construction of contract against creditor which asserted a right to call debt due because of insecurity before first payment due); and Ford Motor Credit Co. v. Goings, 527 P.2d 603 (Okla App.1974) (failure to pay asserted as default when debtor asked for pay-off balance, received contradictory information, but nonetheless tendered estimated amount). Nor should this provision or § 2A-502 be considered to displace the principles of decisions that find conduct that modifies the ability to accelerate or to do so without notice. See Westinghouse Credit Corp. v. Shelton, 645 F.2d 869 (10th Cir.1981) (acceptance of late payments may waive right to strictly enforce terms of contract) and Knittle v. Security State Bank, 593 P.2d 92 (Okla.1979) (estoppel where employee indicated payment need not be made when due).

To avoid a violation of this provision, a party must act in "good faith." Under § 2A-103(3), the term "good faith" in the case of a merchant means both honesty in fact and the observance of reasonable commercial standards of fair dealing in the trade. The UCC leaves it up to the courts to fashion a remedy when a party has not acted in good faith. An Oklahoma court normally will not impose a duty in tort to deal fairly and act in good faith with respect to a commercial transaction. See Rodgers v. Tecumseh Bank, 756 P.2d 1223 (Okla.1988).

The 1991 amendments make no change here.