Acceleration clauses in general loan agreements

General loan agreements are framework contracts and include provisions to be applied to individual loan transactions. Conclusion of general loan agreement does not automatically provide loan to customer. For loan utilisation, conclusion of individual loan agreement is required. Provisions such as term of the loan, payment method (payment in a lump or installments) and interest rate are embodied in the individual loan agreement. Thus, the customer undertakes to pay the loan to the bank within the term specified in the individual loan agreement. General loan agreements also stipulate provisions on acceleration of loan debt. Such provisions can be drafted as granting absolute discretion to the bank to accelerate the debt without any reason. However, in practice several situations are listed in the acceleration clauses and such clauses drafted in a way that the bank has right to accelerate the debt in such situations. With the conclusion of individual loan aggrement customer undertakes to pay the debt within a specified period. Therefore, use of acceleration right and demanding repayment of loan within a short period put customer in a tight position. Nonetheless, there might be some reasonable grounds for the bank to accelerate the debt. If the customer does not fullfil due debt despite of reasonable grounds, the customer shall fall in default and consequences of default shall arise. Nevertheless, in the event the bank accelerates the loan debt without any reasonable ground, the customer can demand material and/or moral damages and/or terminate the general loan agreement.