District of Columbia Notice of Objection Regarding Late Performance in Delivery of Goods and Demand Assurance

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Description

Section 2-609(1) of the Uniform Commercial Code provides:


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.

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FAQ

Example: the particular bull that was bought died. If that bull died it becomes objectively impossible to deliver that particular bull.

Prospective Inability to Perform: When it becomes clear before the time for performance that one party might not be able to perform on the contract. In a large percentage of contracts, the parties are not required to perform simultaneously. Rather, one party must perform first and then the second party must perform.

An example of an anticipatory breach is when a contractor, who was contracted to complete a construction project by a certain date, informs the client before the deadline that they will not be able to complete the project on time.

Comment: Under the Uniform Commercial Code (UCC), when a party to an agreement for the purchase or sale of goods has reasonable grounds to believe its counterparty will not perform as promised, the party may make a written demand for assurance of due performance from the counterparty.

Under UCC Section 2-609, a party to a contract has the right to demand adequate assurance of performance from a distressed counterparty. This demand usually takes the form of a letter known as a demand for adequate assurance letter.

A contract is drawn up with contingencies for a home inspection. After the inspection occurs, the seller decides they do not want to sell their home after all. The seller lets the buyer's agent know that they want out of the contract. This is an act of repudiation in the real estate industry.

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

Prospective failure of condition occurs when a party has reasonable grounds to believe that the other party will be unable or unwilling to perform when performance is due.

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District of Columbia Notice of Objection Regarding Late Performance in Delivery of Goods and Demand Assurance