Also known as:adequate assurances of future performance · assurance of future performance
Written by attorneys · grounded in primary & secondary sources — see below
A right available to a party to a contract for the sale of goods who has reasonable grounds for insecurity about the other party's future performance. The insecure party may demand written assurance that performance will occur and may suspend its own performance until the assurance is received if commercially reasonable.
Sources & Authorities
How it applies
Common Examples
2
Buyer Accepts Defective Load Then Demands Assurance
Prairie Grain Co. accepted a load of corn from Miller Family Farm that tested above the contract moisture limit and applied a steep price discount. After the acceptance Prairie learned the next scheduled loads would likely exceed the limit as well. Prairie sent Miller a written demand for assurance that future deliveries would meet specifications. Miller refused. Prairie lawfully suspended future performance because acceptance of the improper delivery did not eliminate its right to demand adequate assurance.
Seller's Capacity Concerns Prompt Demand
Pro FC learned that Apex Apparel had closed one of its two factories and fallen months behind on orders for another client. Pro FC sent Apex a written demand for adequate assurance of future performance on its three-year jersey contract and suspended further monthly orders. Apex's protest that Pro FC was breaching did not supply the needed assurance. Pro FC's suspension was justified because the factory closure and delays created reasonable grounds for insecurity.
Put it into practice
Test Yourself
10
Practice Questions5
· 3 primary sources
Select any source to read its text and confirm it supports the definition.
Uniform Acts
Restatements
Hornbooks
Study Supplements
Common questions
Frequently Asked
4
Does accepting a nonconforming delivery prevent a buyer from later demanding adequate assurance?+
No. The governing rule expressly provides that acceptance of any improper delivery or payment does not prejudice the aggrieved party's right to demand adequate assurance of future performance. A buyer may accept a defective shipment for practical reasons and still later develop reasonable grounds for insecurity about future performance.
Supporting sources
What must a party show to justify demanding adequate assurance under the UCC?+
The demanding party must show reasonable grounds for insecurity about the other party's future performance. Between merchants the reasonableness of those grounds is measured by commercial standards. Objective facts such as prior nonconformities, capacity problems, or third-party reports of similar failures can satisfy the standard.
Supporting sources
What happens if the recipient of a justified demand fails to provide adequate assurance?+
Failure to provide adequate assurance within a reasonable time not exceeding thirty days constitutes a repudiation of the contract. The demanding party may then treat the contract as repudiated and pursue remedies for anticipatory repudiation, including cancellation and cover.
Supporting sources
Must a demand for adequate assurance be in writing?+
Yes. The UCC requires that the demand be made in writing. An oral request does not trigger the statutory right to suspend performance or the thirty-day clock for repudiation.
Supporting sources
ContractsPerformance, breach, and discharge · Obligations of good faith and fair dealingUBEIntermediate