Opinion ID: 1746370
Heading Depth: 1
Heading Rank: 5

Heading: Was the Coop's Demand for Assurances Unreasonable as a Matter of Law?

Text: A. Issue and scope of review. Sime Farms claimed at trial that the Coop's demand for assurances was unreasonable as a matter of law and, as a result, constituted a repudiation of the contract. It claims that the trial court erred in failing to grant its motion for directed verdict on this issue. We apply the same scope of review as set out in the preceding division of this opinion. B. Applicable law. Sime Farms' repudiation argument rests on its contention that the Coop's demand for assurances imposed conditions that went beyond the contract and that the Coop's performance was contingent upon acquiescence to these conditions. Sime Farms contends such a demand constitutes an anticipatory repudiation. We disagree with Sime Farms' contention. The mere fact that the assurances demanded by the Coop necessitated action beyond that required by the contract does not render the demand unreasonable as a matter of law. As noted by a leading treatise on the Uniform Commercial Code, [a]ll demands for adequate assurance call for more than was originally promised under the contract, and that is precisely what 2-609 authorizes. If, for example, it was appropriate to sell on open credit at the outset of a contract but subsequent events cause insecurity, 2-609 calls for modification of the contract to provide greater security to the seller than the seller could have demanded, absent such insecurity. Thus it is the very purpose of 2-609 to authorize one party to insist upon more than the contract gives. White & Summers § 6-2, at 288; see also U.C.C. § 2-610 official cmt. 2 ([A] demand by one or both parties for more than the contract calls for in the way of counter-performance is not in itself a repudiation.); Robertson, 38 Drake L.Rev. at 341 (noting that an insecure promisee can demand assurance in the nature of additional performances not required by the underlying contract, provided there are reasonable grounds for insecurity). The cases upon which Sime Farms relies for a contrary position are not on point. See National Farmers Org. v. Bartlett & Co., Grain, 560 F.2d 1350 (8th Cir.1977); Pittsburgh-Des Moines Steel Co. v. Brookhaven Manor Water Co., 532 F.2d 572 (7th Cir.1976); Westinghouse Elec. Corp. v. CX Processing Labs., Inc., 523 F.2d 668 (9th Cir.1975); Pillsbury v. Ward, 250 N.W.2d 35 (Iowa 1977). Although the court in the Pittsburgh-Des Moines Steel case discusses, in dicta, whether a demand for more than adequate assurances constitutes a repudiation, it ultimately holds that there was no proof of reasonable grounds for insecurity. 532 F.2d at 581. Moreover, commentators have criticized the court's dictum. See White & Summers § 6-2, at 289; Robertson, 38 Drake L.Rev. at 340-41. The National Farmers, Westinghouse Electric, and Pillsbury cases do not even deal with the issue of whether a demand for assurances is reasonable. Consequently, any statements made in these cases that an anticipatory repudiation results from a party's conditioning of future performance upon requirements outside the contract is simply not persuasive authority in the context of a reasonable demand for assurances. In summary, the mere fact that the Coop demanded performance beyond that required by the contract did not transform its demand into a repudiation as a matter of law. Therefore, the trial court did not err in submitting the question of the reasonableness of the Coop's demands to the jury.