Yet another case... A United States clothing retailer (US) contracted with an It
ID: 419597 • Letter: Y
Question
Yet another case...
A United States clothing retailer (US) contracted with an Italian clothing manufacturer (IT) to custom make jogging suits for the holiday season. The contract called for delivery no later than October 31. One day during late September US gets a call from a fabric company (FC) who informs US that they will not supply IT with the fabric it needs to make the jogging suits unless US agrees to pay FC directly instead of IT because IT has not been making payments on past contracts it made with FC. US calls IT to find out what's going on and IT tells US to ignore the call and that all of the jogging suits will be delivered on time...."no problem".
1) Has IT technically breached its contract with US?
2) If IT has not yet breached the contract, under the UCC is there anything US can do immediately to protect itself?
Explanation / Answer
No IT hasn’t breached its contract with US because as per the case IT has promised to deliver the goods on time while ignoring the call from FC. In this case US have the reason to believe that IT is not going to fulfill its obligations, so US has the right to demand adequate assurance of performance of the contract. US a suspend its own performance under the contract until the assurance is provided. If, after 30 days, IT fails to comply with the request for assurances, the contract is officially over.
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