Final answer:
In 'The Merchant of Venice,' Shylock agrees to lend money to Antonio with the condition that if Antonio fails to repay, Shylock is entitled to a pound of his flesh.
Step-by-step explanation:
In Act 3, Scene 1 of "The Merchant of Venice", when Bassanio approaches Shylock for a loan, the correct statement is that c) The terms of the loan include a pound of Antonio's flesh if he fails to repay. This is a pivotal moment in the play, showcasing Shylock's desire for an unusual and dangerous form of insurance for the loan he extends to Antonio, on behalf of Bassanio. It's this exact clause that later leads to dramatic courtroom scenes and debate over justice versus mercy.