Norcon Power Partners, L.P. v. Niagara Mohawk Power Corp.
Court of Appeals of New York
705 N.E.2d 656 (N.Y. 1998)
Norcon (plaintiff), an independent power producer, had a 25-year power-supply contract with utility Niagara Mohawk (defendant); when Niagara projected that credits owed to it would exceed $610 million in an upcoming period and doubted Norcon could cover them, it demanded assurance Norcon would perform. Norcon sued for a declaration Niagara had no such right and an injunction against anticipatory termination, and the district court ruled for Norcon on the theory that adequate-assurance demands require either insolvency or a UCC sale-of-goods contract; the Second Circuit certified the underlying state-law question to the New York Court of Appeals.
Whether a party to a long-term commercial contract has the right to demand adequate assurance of future performance upon reasonable grounds to believe the other party will breach, even though that party is solvent and the contract is not governed by the Uniform Commercial Code.