UCC § 2-609
Right to Adequate Assurance of Performance
(1) A contract for sale imposes an obligation on each party that the other's expectation of receiving due performance will not be impaired. When reasonable grounds for insecurity arise with respect to the performance of either party the other may in writing demand adequate assurance of due performance and until he receives such assurance may if commercially reasonable suspend any performance for which he has not already received the agreed return. (2) Between merchants the reasonableness of grounds for insecurity and the adequacy of any assurance offered shall be determined according to commercial standards. (3) Acceptance of any improper delivery or payment does not prejudice the aggrieved party's right to demand adequate assurance of future performance. (4) After receipt of a justified demand failure to provide within a reasonable time not exceeding thirty days such assurance of due performance as is adequate under the circumstances of the particular case is a repudiation of the contract.
Professor's notes
Four elements: (1) reasonable grounds for insecurity arise; (2) the insecure party makes a written demand for adequate assurance of due performance; (3) the other party fails to provide adequate assurance within a reasonable time, not exceeding thirty days; (4) failure to provide assurance is treated as a repudiation. The merchant standard of reasonableness governs between merchants.
Hornell Brewing v. Spry operationalizes the rule: the distributor's missed payments and undercapitalization gave Hornell reasonable grounds; Spry's failure to respond with adequate assurance let Hornell suspend performance.
Common misunderstanding: students treat the demand as optional. It is the gate. Without a written demand, the insecure party has no claim of repudiation and may itself be in breach if it suspends performance. The rule is a takanah: the UCC fills a common-law gap by giving the insecure party a structured way to test the other side's commitment without itself becoming the breaching party.
Cases that operationalize this rule
Text
UCC § 2-609. Right to Adequate Assurance of Performance.
(1) A contract for sale imposes an obligation on each party that the other’s expectation of receiving due performance will not be impaired. When reasonable grounds for insecurity arise with respect to the performance of either party the other may in writing demand adequate assurance of due performance and until he receives such assurance may if commercially reasonable suspend any performance for which he has not already received the agreed return.
(2) Between merchants the reasonableness of grounds for insecurity and the adequacy of any assurance offered shall be determined according to commercial standards.
(3) Acceptance of any improper delivery or payment does not prejudice the aggrieved party’s right to demand adequate assurance of future performance.
(4) After receipt of a justified demand failure to provide within a reasonable time not exceeding thirty days such assurance of due performance as is adequate under the circumstances of the particular case is a repudiation of the contract.
Note: The supplement reproduces this provision as N.H.R.S.A. 382-A (New Hampshire’s codification of the UCC). The text reflects the post-2022 UCC Article 2 amendments as adopted in New Hampshire.