Also known as: insecurity · insecurity clause · deems itself insecure
Written by attorneys · grounded in primary & secondary sources — see below
A party's reasonable doubt about another party's ability or willingness to perform contractual obligations as promised. The doubt must rest on objective facts that would lead a reasonable merchant or contracting party to question future performance under commercial standards.
Ironclad Industries contracted with Ideal Solutions to supply custom parts on a fixed schedule for a major project. When Ideal Solutions' primary fabricator filed for bankruptcy and halted work, Ironclad Industries sent a written demand for a revised timeline and proof of replacement capacity. Ideal Solutions offered only vague assurances of commitment. Ironclad Industries suspended further payments until it received concrete assurances.
Infinity Bank ordered specialized equipment from Ironwood Capital under a long-term supply agreement. After Ironwood Capital missed two deliveries and its warehouse suffered storm damage, Infinity Bank demanded written performance certifications and extended warranties. Ironwood Capital replied informally that issues were resolved. Under prevailing trade usage, the informal reply failed to meet commercial standards for merchants.
Select any source to read its text and confirm it supports the definition.
Noon Cars contracted with Crown Automotive for custom brake assemblies. After a plant fire, layoffs, and missed deadlines, Crown Automotive announced it would supply only half the required monthly quantity. Noon Cars demanded a detailed recovery plan and backup facility schedule. Crown Automotive responded with only a general statement of commitment.
River Coastal purchased containers from Silver Sea under a sales contract. After receiving an incomplete shipment and learning of warehouse damage, River Coastal demanded written certifications of future performance. Silver Sea offered only an informal assurance that all issues were resolved.
Stone Resource ordered equipment from Stone Clean. Media reports indicated pending enforcement actions that could close Stone Clean's plant. Stone Resource sent a written demand for contingency plans and production timelines. Stone Clean replied that production remained on track but supplied no supporting details.
Precision Components repeatedly delivered late and defective motor assemblies to Orion Appliances. After two months of total nondelivery, Orion Appliances demanded assurance of future performance. Precision Components conditioned resumption on immediate payment of all past invoices.
Objective events such as a key subcontractor's bankruptcy, repeated missed deliveries, plant fires, or regulatory threats that could halt production supply reasonable grounds. Vague statements of commitment without concrete plans or timelines do not dispel the insecurity.
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Yes. The statute requires a written demand before the aggrieved party may suspend performance or treat failure to respond as repudiation.
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The responding party must furnish assurance within a reasonable time not exceeding thirty days after receipt of the demand. Failure to do so constitutes repudiation.
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No. Acceptance of an improper delivery does not prejudice the right to demand adequate assurance of future performance when new grounds for insecurity arise.
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Commercial standards apply. Industry practice may require detailed written certifications, performance timelines, or third-party verifications when prior defects have been reported.
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…stratagems such as giving false legal advice. It is important to keep the subject off balance, for example, by trading on his insecurity about himself or his surroundings. The police then persuade, trick, or cajole him out of exercising his constitutional rights. Even without employing brutality, the "third degree" or the…