Adequate assurance for performance is available when

Adequate assurance for performance is available when

• A. There is no risk to performance.
• B. The contract has already been performed.
• C. A party can demand adequate assurance only after a breach.
• D. A party has reasonable grounds for being insecure about the other party's performance.

Answer: (D)

Adequate assurance for performance comes into play when one party has reasonable grounds to doubt that the other will perform. In that situation, the insecure party may request in writing that the other party provide assurances of continued performance. If the assurances are not provided within a reasonable time, the insecure party may treat the contract as repudiated and suspend performance or terminate. This makes the option about having reasonable grounds for insecurity the correct one. If there’s no risk to performance, there’s no need for assurances; if the contract has already been performed, assurance isn’t needed; and the right to demand assurance arises before a breach when there are insecurity signals, not only after a breach.

Adequate assurance for performance comes into play when one party has reasonable grounds to doubt that the other will perform. In that situation, the insecure party may request in writing that the other party provide assurances of continued performance. If the assurances are not provided within a reasonable time, the insecure party may treat the contract as repudiated and suspend performance or terminate.

This makes the option about having reasonable grounds for insecurity the correct one. If there’s no risk to performance, there’s no need for assurances; if the contract has already been performed, assurance isn’t needed; and the right to demand assurance arises before a breach when there are insecurity signals, not only after a breach.