Final answer:
The acceleration clause in a contract requires a borrower to repay the entire outstanding loan upon a breach of the contract terms, such as missing payments. It is a protective measure for lenders to ensure the loan can be recovered quickly if the borrower defaults.
Step-by-step explanation:
The acceleration clause is best described by option B) A contract provision that requires a borrower to repay all of an outstanding loan if upon a breach of the contract. This clause is typically included in loan agreements to protect the lender by allowing them to demand full repayment in case the borrower violates terms of the contract, such as missing payments. It can be found in various financial agreements, including mortgages and other loan documents. When a borrower fails to comply with the contract's terms, the acceleration clause can trigger, requiring the borrower to pay off the remaining balance of the loan immediately.
Alongside the acceleration clause, financial institutions may implement other measures to secure a loan, such as requiring collateral, which the lender has the right to seize and sell if the borrower defaults on the loan, or a cosigner, who legally pledges to pay back some or all of the loan if the primary borrower fails to do so.