If one party to a contract has reasonable grounds to believe that the other party either will not or cannot perform his or her contractual obligations,a(n)________ may be demanded.

Question

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When one party has reasonable grounds to believe that the other party will not or cannot perform their contractual obligations, they can demand adequate assurance of performance as a safeguard. The demand for adequate assurance of performance initiates a period during which the obligated party must provide some form of assurance to the demanding party (e.g. financial, contractual, or documentary) that they will indeed perform their obligations. If the obligated party fails to provide adequate assurance during this period, the demanding party may be entitled to treat the breach as an anticipatory repudiation of the contract and cancel the agreement. Thus, the demand for adequate assurance of performance serves to protect the interests of the demanding party and to give assurance to both parties that the agreement will be fulfilled as intended.

If One Party to a Contract Has Reasonable Grounds to Believe