Also known as: adequate assurance of performance · assurances of performance · adequate assurance · UCC 2-609
Written by attorneys · grounded in primary & secondary sources — see below
A contractual right allowing a party with reasonable grounds for insecurity about the other's future performance to demand written assurances of due performance and, if commercially reasonable, to suspend its own performance until the assurances are received.
Apex Towers defaulted on loans and lost several cell towers to a lender. It then told MetroCell that key high-traffic sites were under review and refused a written request to confirm continued access. MetroCell suspended its monthly payments. The failure to provide concrete assurances allowed MetroCell to treat the contract as repudiated and avoid further performance obligations.
Silver Sea delivered only half the ordered refrigerated containers and its warehouse suffered storm damage. River Coastal sent a written demand for detailed performance certifications on the remaining parts. Silver Sea replied informally that issues were resolved but supplied no certifications or warranties. River Coastal could suspend further payments because the response failed commercial standards for merchants.
Select any source to read its text and confirm it supports the definition.
River Coastal had accepted earlier engine parts despite minor documentation errors on certificates of origin. After a later shipment appeared refurbished rather than new, River Coastal demanded written assurance that remaining parts would be brand new with proper certificates. The prior acceptances did not bar the fresh demand for assurance on the distinct quality concern.
Reasonable grounds exist when objective facts such as financial distress, loss of assets, incomplete deliveries, or refusal to confirm performance create legitimate doubt about future compliance. The demand must be in writing and the response must meet commercial standards between merchants.
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Failure to provide adequate assurance within a reasonable time, not exceeding thirty days under the UCC, constitutes a repudiation of the contract. The demanding party may then suspend performance and pursue remedies for total breach.
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No. Acceptance of any improper delivery or payment does not prejudice the right to demand adequate assurance of future performance when new grounds for insecurity arise.
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Yes under the UCC. The insecure party must make the demand in writing before suspending performance, though commercial standards govern the adequacy of any response between merchants.
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…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, §…