Construction Inc. contracts to buy some heavy equipment from Dig Machines Inc. Before either party performs, Dig sells its assets to Excavation Corporation. On learning of the sale, Construction is concerned about its contract with Dig. Construction should
A)demand an assurance of performance from the seller.
B)consider the contract repudiated and sue the seller for breach.
C)buy the equipment from a different firm and bill the seller for the price.
D)buy the equipment from a different firm and bill Excavation for the price.

Question

Quizplus · Accepted Answer

When a party to a contract learns of circumstances that give it reasonable grounds to believe that the other party will not perform, it can demand in writing a reasonable assurance of performance. Since Dig Machines Inc. sold its assets to Excavation Corporation before performing under the contract with Construction Inc., Construction has reasonable grounds to be concerned about Dig's ability to fulfill the contract. Therefore, demanding an assurance of performance from Dig (the seller) is the appropriate action.