Chase Daniel purchased a new van on an installment contract from Bob Stoops Motors (Stoops) for $15,000. The terms of the contract stated that Chase must make a monthly payment of $500 to Stoops on the 1st of each month. Further, the contract states that payments made more than 10 days late will be subject to a late fee of 10% of the payment.

After one year, Chase had made payment after the first of the month in two out of the twelve months. None of the payments were more than 10 days late, and Stoops never charged Chase a late fee. On the thirteenth month (January), Chase made his payment on the second day of January.

On January 3rd, Stoops Motors sends Chase a letter stating, “You have made your payment after its due date, and thus are in default of your agreement. In all future months, Stoops Motors expects to receive its payment on or before the 1st of the month, or your loan balance will be accelerated.”

The next month (February), Chase Daniel doesn't make payment until February 3. Stoops refuses payment and instead shows Daniel a copy of a letter (which Stoops mailed to Daniel on February 2) stating that Stoops had accelerated the debt.

Was this action by Stoops Motors proper?

A- No, because Stoops had accepted multiple late payments in the past year, and thus had waived his right to accelerate the debt.

B- Yes, because after failing to accelerate the loan upon receiving previous late payments by Chase, Stoops Motors gave Chase notice of its intention to enforce the contract in accordance with its terms.

C- No, because Stoops Motors failed to give Chase notice and an opportunity to cure the prior late payments and thus, cannot hold them against him.

D- No, because the late fee provision in the contract created a grace period (thus this would not be considered a default).