(a) A contract imposes on a party 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 party may demand in a record adequate assurance of due performance and, until the demanding party receives such assurance may if commercially reasonable suspend any performance, other than with respect to contractual use restrictions, for which the party agreed return performance has has not already been received the agreed return.

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

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

(d) 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.

Committee Action: Considered without substantial substantive comment.

Uniform Law Source: 2-609.

Reporter's Note: Corresponds to existing Article 2.