Knecht contracts to sell $20,000 of goods to Morales.Later,Morales hears from another supplier that Knecht is having financial trouble,and Morales is concerned that Knecht will not be able to fill his order.If Morales has reasonable grounds for insecurity about Knecht's contractual performance:
A) Morales has no recourse except to wait for the contractual delivery date and,if Knecht fails to deliver,Morales can then sue for breach of contract.
B) Morales may demand written assurance of performance from Knecht before the contract delivery date,and Knecht must provide adequate assurance within a reasonable time not exceeding 30 days.
C) Morales may demand assurance of performance from Knecht,and Knecht must provide adequate assurance within ten days or the contract is repudiated.
D) the statement by the other supplier creates an anticipatory repudiation which allows Morales to avoid the contract.

Question

Quizplus · Accepted Answer

Under the Uniform Commercial Code (UCC), if a party has reasonable grounds for insecurity about the other party's contractual performance, they may demand adequate assurance of performance. The demand must be made in writing and the other party must provide adequate assurance within a reasonable time, not exceeding 30 days. If they fail to do so, it can be considered a repudiation of the contract. Therefore, Morales may demand written assurance of performance from Knecht before the contract delivery date, and Knecht must provide adequate assurance within a reasonable time not exceeding 30 days.

Knecht Contracts to Sell $20,000 of Goods to Morales