Pittsburgh-Des Moines Steel Co. v. Brookhaven Manor Water Co.
United States Court of Appeals, Seventh Circuit
532 F.2d 572 (1976)
Pittsburgh-Des Moines Steel Co. (PMD, plaintiff) agreed to build a steel tank for Brookhaven Manor Water Co. (defendant) for $175,000, with the parties rejecting PMD's initial proposal for progress payments and instead agreeing Brookhaven would pay the full price within 30 days of completion. After beginning work, PMD demanded written assurance that Brookhaven already had the entire $175,000 sitting in escrow, and when Brookhaven — not yet contractually obligated to have the funds ready — could not provide that assurance, PMD terminated the project and sued for improper repudiation; Brookhaven counterclaimed, and the trial court awarded Brookhaven damages, prompting PMD's appeal.
Whether, under UCC Section 2-609, a party may demand written assurance of performance and suspend its own performance until receiving that assurance only where reasonable grounds for insecurity actually exist regarding the other party's performance.