Also known as: adequate assurance of performance · assurance of performance · demand adequate assurance · UCC 2-609 · adequate assurances
Written by attorneys · grounded in primary & secondary sources — see below
A contractual right that permits an obligee facing reasonable grounds for insecurity about the obligor's future performance to demand adequate assurance of due performance. The obligee may, if commercially reasonable, suspend its own remaining performance until the assurance arrives. Failure to provide adequate assurance within a reasonable time may be treated as a repudiation.
Select any source to read its text and confirm it supports the definition.
BlueWave Shipping chartered a vessel from HarborLine. After two failed safety inspections and detentions, BlueWave sent a written demand for documentation confirming completed repairs and current seaworthiness. HarborLine replied only that repairs were ongoing and the ship would sail when possible. BlueWave suspended hire payments and chartered a substitute vessel.
MetroCell leased cell-site space from Apex Towers. After Apex defaulted on loans and lost towers to a lender, MetroCell sent a written demand confirming continued access to key high-traffic sites. Apex stated the sites were under review and refused to provide written confirmation. MetroCell stopped monthly payments.
River Coastal purchased refrigerated containers and engine parts from Silver Sea under a UCC-governed sales contract. After receiving an incomplete container shipment and learning of warehouse storm damage, River Coastal sent a written demand for performance certifications and extended warranties. Silver Sea replied informally that all issues were resolved but supplied no certifications.
Reasonable grounds arise when objective facts indicate a substantial risk that the other party will commit a total breach by nonperformance. Subcontractor bankruptcy causing critical delays, repeated inspection failures, or loss of key assets to lenders have each been held sufficient. Vague statements of continued commitment do not eliminate the grounds once created.
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The response must supply concrete information adequate under the circumstances, such as a revised timeline, proof of financing, or performance certifications. A vague reply that repairs are ongoing or that the party remains committed fails when the insecurity stems from specific, documented problems. Commercial standards between merchants guide the required level of detail.
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Failure to provide adequate assurance within a reasonable time may be treated as an anticipatory repudiation. The demanding party may then suspend performance, cancel the contract, and recover damages measured by the loss of the remaining bargain. The rule applies even if the time for full performance has not yet arrived.
Supporting sources
No. Acceptance of an improper delivery or payment does not prejudice the right to demand adequate assurance of future performance. Each demand is evaluated on current facts, so new concerns about quality or capacity support a fresh demand even after earlier minor defects were accepted.
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