Acceleration

A delinquent counterparty, borrower, or other miscreant can “default” on a contractual obligation without (necessarily) incurring the full, balls-out wrath of his lender. Sure, the lender may be utterly exasperated with his cretinous client, but she may have plenty of good reasons to sit on her hands. A defaulting party is one who has failed to do what she promised, whether or not the non-defaulting party has taken any action as a result.

The process of taking that action: declaring an event of default or terminating a contract is called “acceleration”.

Becomes quite important when considering concepts like cross-acceleration and cross-default. Knowing what you know about acceleration from this article, can you guess what the difference might be?