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38. If the subcontractor sues the general contractor for breach of contract, is the subcontractor likely to prevail?
The general contractor then immediately obtained the steel joists from another supplier.
Although the general contractor had no reason to doubt the subcontractor's ability to perform, the general contractor wanted to be sure that the subcontractor was on track for delivery in September. He therefore wrote a letter on July 1 to the subcontractor demanding that the subcontractor provide assurance of its ability to meet the September 1 deadline. The subcontractor refused to provide such assurance.
On June 1, a general contractor and a subcontractor entered into a contract under which the subcontractor agreed to deliver all of the steel joists that the general contractor required in the construction of a hospital building. The contract provided that delivery of the steel joists would begin on September 1.
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A is incorrect. The general contractor could not seek adequate assurances when there is no reasonable justification for the demand. There are no facts in this question that suggest the general contractor had any grounds for insecurity.
B is incorrect. The parties entered into a requirements contract that under UCC § 2-306(1) will not fail for indefiniteness because the contract did not include a specific quantity term. The subcontractor will likely prevail because under the adequate assurance doctrine, a party need respond to a demand for adequate assurance only if the demand is reasonable and justified, and the general contractor's demand for assurance was unjustified.
C is incorrect. The adequate assurance doctrine is a UCC implied term that arises by operation of law. Therefore, the doctrine's applicability is not dependent upon the express authority of the party seeking assurance. However, in this case, the general contractor's demand for assurance was unjustified because he had no reasonable grounds for insecurity. Therefore, the subcontractor will likely prevail.