70A-2a-401 - Insecurity -- Adequate assurance of performance.
70A-2a-401. Insecurity -- Adequate assurance of performance.
(1) A lease contract imposes an obligation on each party that the other's expectation ofreceiving due performance will not be impaired.
(2) If reasonable grounds for insecurity arise with respect to the performance of eitherparty, the insecure party may demand in writing adequate assurance of due performance. Untilthe insecure party receives that assurance, if commercially reasonable, the insecure party maysuspend any performance for which he has not already received the agreed return.
(3) A repudiation of the lease contract occurs if assurance of due performance adequateunder the circumstances of the particular case is not provided to the insecure party within areasonable time, not to exceed 30 days after receipt of a demand by the other party.
(4) Between merchants, the reasonableness of grounds for insecurity and the adequacy ofany assurance offered must be determined according to commercial standards.
(5) Acceptance of any nonconforming delivery or payment does not prejudice theaggrieved party's right to demand adequate assurance of future performance.
Enacted by Chapter 197, 1990 General Session