Summary of Hope’s Architectural Products v. Lundy’s Construction
U. S. D Ct  [1991]

Relevant Facts: Df Lundy entered into a K for the construction of an addition to an Elementary School.  Df provided the statutory public works bond secured through Df Bank.  Pl, Hope’s is a manufacturer of custom built windows which contracted w/ Lundy to manuf. 93 windows for the project @ $55,000.  The K included a term pertaining to the time for delivery, between 12 and 14 weeks after Hope’s received the shop drawings from Df on July 18.  Delivery was due no later than Oct. 24.   In Sept Df wrote Pl requesting that installation of the windows begin Oct 19 and finish by the 26^th.  Pl did not make any response. The windows were shipped from NY to Kansas City Oct 28^th.  Pl issued a letter suspending and demanded assurances that Df would not back charge as a condition to delivery, but Df was unwilling.  Pl also demanded KP before delivery.  Lundy’s did not pay, Df Bank would not pay on the bond, and Pl did not deliver the windows.

Legal Issue(s): Whether Pl’s delay in delivering windows and Pl’s excessive demands entitled Df to treat Pl as in breach of contract, and whether the Pl was entitled to demand assurances?Court’s Holding: Yes, and No.

Procedure: Pl filed action to recover damages = KP; denied.

Law or Rule(s): When reasonable grounds for insecurity arise w/ respect to the performance of either party, the other party may in writing demand adequate assurances of due performance and until he receives such assurance may if commercially reasonable suspend any performance for which he has not already received the agreed return. To suspend performance Df/Pl must have had reasonable grounds for insecurity regarding the other’s performance, and have demanded in writing adequate assurance of future performance, and not received such assurance.

Court Rationale: Hope’s claim that the delay in delivery was immaterial and did not excuse Lundy’s duties are off point.  Even if an immaterial delay did not excuse future performance by Lundy’s no performance was due from Lundy’s until the windows were delivered to the job site, which never occurred. There was no evidence that the delay was a matter beyond Pl’s control.

“Reasonable grounds,” and “adequate assurances” are fact based determinations.  When Hope’s first demanded assurances it was already in breach.  The assurances demanded were excessive.  If the assurances demanded are (excessive) more than adequate, the other party refuses to accede to the demands, the ct may find the demanding party was in breach or a repudiator.  Hope’s demand for blanket assurances that it would not be held responsible for any extra costs was overly broad and unreasonable. Demanding payment in full before it was due was unreasonable and amounts to anticipatory breach.    Giving notice of its intention to avail itself of a legal right did not indicate that Lundy’s was unwilling or unable to perform under the K.  Hope’s delay and excessive demands entitled Lundy’s to treat Hope’s as in breach and cancel the K.

Plaintiff’s Argument: Lundy’s failure to provide assurances as demanded and termination of the K amounted to a total breach.

Defendant’s Argument: Hope’s breached the K by withholding the delivery of the windows therefor Df was entitled to cancel the K.

*Delivery the act by which the res or substance thereof is placed w/i the actual or constructive possession or control of another, depending on the intent of the parties.