Problem.Planning.Adequate assurance of performance

     The opinion in Hope's Architectural concluded that Lundy's letter of October 14 demanding delivery of the windows by October 19 might have justified a demand by Hope's Architectural for adequate assurance of performance, but that, because Hope's Architectural did not respond, that letter "merely came and went without any legal consequence."  Why did the court think that the letter of October 14, 1988 might have justified a demand by Hope's Architectural for adequate assurance of performance?

     1.  Imagine that you are counsel for Hope's Architectural Product's, Inc. on October 15.  Just after a morning coffee break, your client arrives at your office and shows you Lundy's October 14 letter.  Your client also tells you that it is about one week behind in production of the windows and will not be able to deliver the windows until the end of October (about a week after the contract deadline).  What do you think of the following strategy?  (1) Draft and send a written demand for adequate assurance of performance to Lundy's; (2) have your client continue to work on production of the windows (perhaps even through some overtime by employees), instead of suspending performance pending receipt of adequate assurance of performance; and (3) tender delivery of the windows when complete and take the position with Lundy's that the contract deadline for delivery was extended by the amount of time between Hope's receipt of Lundy's letter on October 14 and the time your client receives adequate assurance from Lundy's.  Consider U.C.C 2-609, including especially its Official Comment 2.  Also consider the following California State Bar's Rules of Professional Conduct. 

     2.  Assume that you have concluded that it would be appropriate to draft and send to Lundy's a written demand for adequate assurance of performance.  Draft such a demand.  What other options might you discuss with your client? 

     3.  Assume that you represent Lundy's and that your client has presented you with a demand for adequate assurance of performance that it received from Hope's lawyer.  What does your client risk by not responding?   Draft a response. 

     4.  Would an e-mail demand for assurance from Hope's to Lundy constitute a demand "in writing?"  See U.C.C 1-201(46).  If not, would it have been permissible for Hope's Architectural and Lundy's to have included in the original contract a term requiring that any demand for adequate assurance and any response to such a demand be sent by e-mail to a stated e-mail address?  See U.C.C 1-102(3).  How would such a term have affected the strategy outlined in item 1, above?   If you had been the lawyer drafting the contract on behalf of Lundy's, would you have thought to include such a term?  After enactment of the Federal Electronic Signatures in Global and National Commerce Act, would such a term be necessary?