Also known as: adequate assurance · adequate assurances of performance · assurance of performance
Written by attorneys · grounded in primary & secondary sources — see below
A contractual right that permits a party facing reasonable grounds for insecurity about the other's future performance to demand written assurance of due performance. The demanding party may suspend its own remaining performance until adequate assurance is received. Failure to provide assurance within a reasonable time constitutes repudiation.
Harbor Hope Foundation contracted with GalaWorks Events to stage its annual fundraising gala. GalaWorks canceled other nonprofit events and announced major staff reductions. Harbor Hope halted ticket sales and sponsor outreach while demanding written assurance of full performance. GalaWorks offered only a vague statement of confidence, leaving Harbor Hope entitled to withhold further performance.
BlueWave Oceanographic hired HarborWorks Shipyard to build a custom research vessel tied to grant deadlines. BlueWave's engineer observed minimal progress, unpaid subcontractors, and rumors of an impending sale. BlueWave stopped milestone payments and demanded detailed written assurance of timely completion. HarborWorks replied only that it would accelerate work, allowing BlueWave to treat the inadequate response as repudiation.
Select any source to read its text and confirm it supports the definition.
MetroCell entered a ten-year network sharing agreement with NanoWireless. NanoWireless announced it was exiting the consumer market and selling assets. MetroCell demanded written assurance of continued full performance for the contract term. NanoWireless replied only that service would continue during transition, so MetroCell could treat the vague response as repudiation despite prior acceptance of minor deliveries.
Reasonable grounds exist when objective facts indicate a substantial risk that the other party will commit a total breach by nonperformance. Events such as canceled contracts, staff cuts, unpaid subcontractors, asset sales, or regulatory threats can create such insecurity. The demand must be in writing and the suspension of performance must be commercially reasonable.
Supporting sources
Adequate assurance requires concrete commitments or evidence that reasonably restores confidence in performance, such as detailed timelines, financial safeguards, or contingency plans. Vague statements of confidence or general promises to accelerate work are insufficient when serious operational problems have been shown.
Supporting sources
No. Acceptance of improper delivery or payment does not waive the right to demand adequate assurance of future performance when new grounds for insecurity arise. Each demand is evaluated independently on current facts.
Supporting sources
Failure to provide assurance adequate under the circumstances within a reasonable time, not exceeding thirty days under the UCC, constitutes repudiation. The insecure party may then treat the contract as breached and pursue remedies including cover.
Supporting sources
…good faith aspects of the output and requirement problems of subsection (1). It also raises questions of insecurity and right to adequate assurance under this Article.” Section 2-306 is consistent with prior New York case law (Buerger and O’Connor, Practice Commentaries, McKinney’s Cons Laws of NY, Book 62½, Uniform Commercial Code, §…