Repudiation and the Failure to Respond

Suppose Sabin fulfills all the conditions for suspension of performance: (1) he has reasonable grounds thinking that the musicians would materially breach the contract; (2) he demands adequate assurance of performance, and (3) it is reasonable to suspend performance until he receives adequate assurance of performance. Sabin may then suspend his performance.

But: if he receives adequate assurance of performance, he can no longer do so. He is obligated to perform his obligations. How long does Sabin have to wait for adequate assurance? The answer: a reasonable time.

The rule is that after a reasonable time, the party who has rightfully suspended performance may treat the failure to provide adequate assurance as a material breach. See Restatement (Second) Contracts § 251(2). The material breach excuses the party from his or her contractual obligations.

Note: Restatement (Second) Contracts § 251(2) treats the failure to provide adequate assurance in a reasonable time as a repudiation. This is the same as regarding it as a material breach.

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