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This entry was published on 2014-09-22
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Insecurity: Adequate Assurance of Performance
Uniform Commercial Code (UCC) CHAPTER 38, ARTICLE 2-A, PART 4
Section 2-A-401. Insecurity: Adequate Assurance of Performance.

(1) A lease contract imposes an obligation on each party that the
other's expectation of receiving due performance will not be impaired.

(2) If reasonable grounds for insecurity arise with respect to the
performance of either party, the insecure party may demand in writing
adequate assurance of due performance. Until the insecure party receives
that assurance, if commercially reasonable the insecure party may
suspend any performance for which he or she has not already received the
agreed return.

(3) A repudiation of the lease contract occurs if assurance of due
performance adequate under the circumstances of the particular case is
not provided to the insecure party within a reasonable time, not to
exceed thirty days after receipt of a demand by the other party.

(4) Between merchants, the reasonableness of grounds for insecurity
and the adequacy of any assurance offered must be determined according
to commercial standards.

(5) Acceptance of any nonconforming delivery or payment does not
prejudice the aggrieved party's right to demand adequate assurance of
future performance.