Demanding Assurances of Performance Early Contract and Charterparty Review (Part 4 of Economic Crisis Series)
Obtaining performance assurances in contracts. This is Part 4 of our series on the tools and strategies that international companies can use to protect their positions in the current economic situation. Luke Zadkovich explains a useful tool to flush out whether a contractual counterparty is in a position to up hold their end of the bargain. The United States UCC procedure of ‘demanding adequate assurances of performance’ is particularly relevant in economic uncertainty. The underlying principles of this approach go beyond US contract law and can inform strategies in dealing with counterparties internationally and in contracts subject to other governing laws. Early dialogue is recommended. As is assessing counterparty risk closely and using information gathered to manage that risk. This talk addresses strategies to employ during contract performance. In a later talk in this series, we will look at what you can do pre-contract to limit your exposure in this current market. We will also assess more serious action to obtain security and protect assets, where dialogue does not work or is inadvisable, in other upcoming talks. For further details, please contact Luke Zadkovich, or your usual contact at ZFZ.