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 Section 251 of the Restatement (Second) of Contracts : (1) Where reasonable grounds arise to believe that the obligor will commit a breach by non-performance that would of itself give the obligee a claim for damages for total breach under § 243, : (1) the obligee may demand adequate assurance of due performance and may, if reasonable, suspend any performance for which he has not already received the agreed exchange until he receives such assurance. (2) The obligee may treat as a repudiation the obligor's failure to provide within a reasonable time such assurance of due performance as is adequate in the circumstances of the particular case.


The Comment to this section explains that an obligee of an executory promise 'who believes, for whatever reason, that the obligor will not or cannot perform without a breach, is always free to act on that belief' by withholding his own performance. But if he cannot prove that his belief was correct, his non-performance may itself be a material breach of the contract, making him liable for damages. The Comment continues: This Section affords him an opportunity, in appropriate cases, to demand assurance of due performance and thereby avoid the ...

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