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words or conduct, that the repudiating party intends to perform the contract. To be effective, retraction must occur before the repudiating party’s next performance is due and before the nonrepudiating party has: cancelled the contract, materially changed position in reliance on the repudiation ( e.g. , entering a substitute contract), or otherwise indicated that she considers the repudiation final. Right to Adequate Assurance of Performance Special rules apply if reasonable grounds for insecurity arise concerning one party’s performance that is not yet due. Here, the insecure party (if not in breach herself) may, in writing, demand adequate assurance of due performance. If commercially reasonable, the insecure party may suspend performance (for which she has not received the agreed return) until she gets that assurance. The other party’s failure to provide that assurance within a reasonable time not exceeding 30 days is a repudiation. 1. Reasonable Grounds for Insecurity Reasonable grounds for insecurity as to one party’s performance arise if (1) there is not an outright repudiation of the contract, but (2) there is objective reason to doubt the party’s willingness or ability to perform ( e.g. , seller’s loss of a supply source or one party’s insolvency). Relevant factors include:
the nature of the contract, the parties’ relationship, information gleaned from apparently trustworthy sources, and the counterparty’s performance on the current contract and other contracts.
2. Demand for Assurances without Reasonable Grounds for Insecurity If a party demands adequate assurance of due performance without reasonable grounds for insecurity, then the demand may be a repudiation. Impracticability of Performance The impracticability doctrine may excuse the seller’s delay or failure to deliver the goods if (1) a contingency has occurred, (2) the contingency’s nonoccurrence was a basic assumption on which the parties made the contract (usually, the contingency was not reasonably foreseeable to the parties at contracting), (3) the contingency has made the seller’s performance impracticable, (4) the seller is not at fault for the contingency and did not cause it, and (5) the seller did not
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