Opinion ID: 661931
Heading Depth: 1
Heading Rank: 4

Heading: reasonable grounds for insecurity

Text: 21 Schmid argues that it was excused from performance under section 2609, which reads in relevant part: 22 When reasonable grounds for insecurity arise with respect to the performance of either party the other may in writing demand adequate assurance of due performance and until he receives such assurance may if commercially reasonable suspend any performance for which he has not already received the agreed return. 23 Cal.Com.Code Sec. 2609(1) (West 1964 and Supp.1993). Schmid argues that it had reasonable grounds for insecurity with respect to Vezel's performance. First, Vezel failed to load the Lady Dona for December shipment. Second, Schmid heard rumors in the industry that Vezel was not fulfilling its contracts. 24 Although there might be a factual question as to whether Schmid had reasonable grounds for insecurity, its claim fails because under section 2609 a party is justified in withholding performance only in cases where it has not already received the agreed return. Cal.Com.Code Sec. 2609(1). Here, Schmid withheld its performance although it had received the agreed upon return: 200 tons of sesame seeds. Schmid therefore cannot use section 2609 to excuse its failure to pay Vezel. See Cherwell-Ralli, Inc. v. Rytman Grain Co., Inc., 433 A.2d 984 (Conn.1980) (reaching same conclusion in interpreting same section of U.C.C. as found in Connecticut statute).