/ad-uh-kwit uh-SHOOR-uhns of doo per-FOR-muhns/·phrase
Also known as:adequate assurances of due performance · assurance of performance · demand for assurance
Written by attorneys · grounded in primary & secondary sources — see below
A right of a party to a contract who has reasonable grounds for insecurity about the other party's performance to demand in writing adequate assurance of due performance and to suspend performance until such assurance is received. Failure to provide assurance adequate under the circumstances within a reasonable time constitutes repudiation.
Sources & Authorities· 2 primary sources
Select any source to read its text and confirm it supports the definition.
Uniform Acts
Restatements
Casebooks
Study Supplements
How it applies
Common Examples
2
Construction Milestone Suspension
Ash Homes, LLC contracted with Fair Contractors, Corporation to build a tower on an eighteen-month schedule with progress payments tied to milestones. Three months in, Fair Contractors' key structural subcontractor filed for bankruptcy and halted critical work, pushing the project ninety days behind. Ash Homes demanded specific written assurances including subcontractor replacement details and proof of financing. Fair Contractors offered only general statements of commitment, so Ash Homes suspended further payments pending a response.
Medical Equipment Delivery Demand
MedEquip signed a three-year contract to supply customized ventilators to Valley Hospital. Midway through year one, regulators imposed serious quality-control sanctions on MedEquip. Valley demanded written assurance of continued timely and compliant deliveries. MedEquip replied only with vague statements about working through challenges, so Valley cancelled the contract and secured another supplier.
Common questions
Frequently Asked
4
When does a party have reasonable grounds to demand adequate assurance?+
Reasonable grounds arise when objective facts create legitimate doubt that the other party will perform in a manner giving rise to a claim for total breach damages. A key subcontractor's bankruptcy halting critical work on a tight schedule, regulatory sanctions on a supplier, or a public announcement of market exit and asset sales each supply such grounds. Vague responses to a demand do not dispel the insecurity.
Supporting sources
What makes an assurance adequate under the circumstances?
Adequacy depends on commercial standards between merchants and the specific facts creating the insecurity. A bare statement of continued commitment or an expectation of resuming supply later in the year fails when the demand seeks concrete details such as timelines, replacement subcontractors, financing proof, or alternative facilities. Industry norms in regulated fields like pharmaceuticals or maritime supply typically require more specific commitments.
Supporting sources
What happens if the demanded assurance is not provided?+
Failure to furnish assurance adequate under the circumstances within a reasonable time constitutes repudiation. The insecure party may then treat the contract as breached, cancel, cover with a substitute supplier, and recover damages without waiting for an actual failure of performance. Courts have applied this outcome in cases involving quality sanctions, asset sales, and production halts.
Supporting sources
Does prior acceptance of defective performance waive the right to demand assurance later?+
No. Acceptance of any improper delivery or payment does not prejudice the aggrieved party's right to demand adequate assurance of future performance. A buyer who accepted shipments with minor documentation errors may still demand detailed written assurance when new and distinct concerns about quality or capacity arise.
Supporting sources
ContractsPerformance, breach, and discharge · Breach (including material and partial breach, and anticipatory repudiation)UBEFoundational