Demand Letter - Contract Performance (New York)

DEMAND FOR CONTRACT PERFORMANCE — STATE OF NEW YORK

New York-specific template for demanding performance of contractual obligations. Distinguishes between NY U.C.C. Article 2 (sale of goods) and New York common law (services/intangibles); preserves remedies including specific performance, injunctive relief, and adequate assurance of performance.

NEW YORK PRACTICE NOTES

☐ Goods vs. Services Determines Statute. Under the Schenectady Steel Co. v. Bruno Trimpoli Gen. Constr. Co., 43 A.D.2d 234 (3d Dep't 1974), "predominant purpose" test, determine whether the Agreement is governed by N.Y. U.C.C. Article 2 (sale of goods) or by New York common law (services, real estate, licenses). Only goods contracts may invoke § 2-609 adequate assurance.

☐ Adequate Assurance. For goods contracts, N.Y. U.C.C. § 2-609 authorizes a written demand for adequate assurance of due performance when "reasonable grounds for insecurity" arise. Failure to respond within a reasonable time not exceeding thirty (30) days is a repudiation. Norcon Power Partners, L.P. v. Niagara Mohawk Power Corp., 92 N.Y.2d 458 (1998), extended limited adequate-assurance doctrine to long-term commercial contracts not governed by the U.C.C.

☐ Specific Performance. New York courts grant specific performance for unique goods, real property, and certain services where legal damages are inadequate. Sokoloff v. Harriman Estates Dev. Corp., 96 N.Y.2d 409 (2001).

☐ Anticipatory Repudiation. New York requires a "clear and unqualified" expression of intent not to perform. Princes Point LLC v. Muss Dev. L.L.C., 30 N.Y.3d 127 (2017).

☐ SOL Reminder. Contract claims: six (6) years under CPLR § 213(2). Sale of goods: four (4) years under N.Y. U.C.C. § 2-725.

1. LETTERHEAD AND DELIVERY

[LAW FIRM LETTERHEAD]
[________________________________] (NY Street Address)
[________________________________] (City, New York, ZIP)
Tel: [________________________________] | E-mail: [________________________________]

VIA CERTIFIED MAIL RRR, OVERNIGHT COURIER, AND E-MAIL

Date: [__/__/____]

To:
[________________________________] (Counterparty Legal Name)
Attn: [________________________________], [Title]
[________________________________] (Street)
[________________________________] (City, State, ZIP)

Re: Formal Demand for Performance Under [Name of Agreement], dated [__/__/____]
Our File No.: [________________________________]

2. BACKGROUND

2.1 Client [________________________________] ("Client"), a [New York corporation / LLC / partnership], and Counterparty [________________________________] ("Counterparty") are parties to that certain [________________________________] dated [__/__/____] (the "Agreement").

2.2 Under Section [____] of the Agreement, Counterparty undertook the following material obligations (the "Outstanding Obligations"):

a. [________________________________]
b. [________________________________]
c. [________________________________]

2.3 Counterparty has failed, refused, or neglected to perform the Outstanding Obligations as follows:

[Describe specific acts and omissions with dates, amounts, communications]

2.4 Client has fully performed, or stands ready, willing, and able to perform, all of its own obligations under the Agreement.

3. DEMAND FOR PERFORMANCE AND ADEQUATE ASSURANCE

3.1 Formal Demand. Pursuant to the Agreement and applicable New York law, Client formally demands that Counterparty fully and specifically perform the Outstanding Obligations within [ten (10) / thirty (30)] calendar days of Counterparty's receipt of this letter (the "Cure Period").

3.2 Adequate Assurance (U.C.C. Cases Only). [If the Agreement involves a sale of goods:] Pursuant to N.Y. U.C.C. § 2-609, Client hereby demands, in writing, adequate assurance of due performance by Counterparty. Client has reasonable grounds for insecurity based on the facts described in Section 2 above. Counterparty must provide such assurance in a form reasonable under the circumstances within a reasonable time not exceeding thirty (30) days. Failure to do so constitutes a repudiation of the Agreement under N.Y. U.C.C. § 2-609(4), and Client may treat the Agreement as repudiated under § 2-610.

3.3 Adequate Assurance (Non-U.C.C. Long-Term Commercial Contracts). [If not a goods contract but a long-term commercial contract:] Client invokes the limited adequate-assurance doctrine recognized by the New York Court of Appeals in Norcon Power Partners, L.P. v. Niagara Mohawk Power Corp., 92 N.Y.2d 458 (1998), and demands written assurance of Counterparty's intent and ability to perform.

3.4 Form of Assurance. Adequate assurance must include, at minimum:

☐ A written confirmation of Counterparty's commitment to perform;
☐ A detailed work plan and timeline;
☐ Financial information demonstrating ability to perform (recent audited or reviewed financial statements, or bond/letter of credit);
☐ Evidence of insurance coverage required by the Agreement; and
☐ Names of personnel assigned to the performance.

4. REMEDIES CLIENT WILL PURSUE ON NON-PERFORMANCE

If Counterparty fails to cure within the Cure Period or fails to provide adequate assurance, Client will pursue the full range of remedies available under New York law, including:

4.1 Treatment as Repudiation. Under N.Y. U.C.C. § 2-610, Client may: (a) await performance for a commercially reasonable time; (b) resort to any remedy for breach; and (c) suspend its own performance.

4.2 Cover and Cover Damages. Where the Agreement is for goods, Client may "cover" under N.Y. U.C.C. § 2-712 and recover the difference between the cost of cover and the contract price, plus incidental and consequential damages under §§ 2-715.

4.3 Market Price Damages. Alternatively, under N.Y. U.C.C. § 2-713, Client may recover the difference between the market price at the time of breach and the contract price.

4.4 Specific Performance and Replevin. Where goods are unique or in other proper circumstances, Client may pursue specific performance under N.Y. U.C.C. § 2-716 and replevin where Counterparty has failed to deliver.

4.5 Specific Performance of Real Property / Unique Goods. Sokoloff v. Harriman Estates Dev. Corp., 96 N.Y.2d 409 (2001); Van Wagner Adv. Corp. v. S & M Enters., 67 N.Y.2d 186 (1986).

4.6 Preliminary Injunction. Client may seek a preliminary injunction under CPLR § 6301, applying the three-prong test from Nobu Next Door, LLC v. Fine Arts Hous., Inc., 4 N.Y.3d 839 (2005): (i) likelihood of success on the merits, (ii) irreparable harm absent relief, and (iii) balance of equities in Client's favor.

4.7 Declaratory Judgment. Client may seek declaratory relief under CPLR § 3001 clarifying the parties' respective rights and obligations.

4.8 Monetary Damages. Direct, incidental, and consequential damages (subject to Hadley v. Baxendale foreseeability as applied under Kenford Co. v. County of Erie, 73 N.Y.2d 312 (1989)), plus:
- Prejudgment interest at 9% per annum from the earliest ascertainable date the cause of action existed (CPLR §§ 5001, 5004);
- Post-judgment interest (CPLR § 5003);
- Reasonable attorneys' fees where contractually authorized; and
- Costs and disbursements.

4.9 Commercial Division Venue. Where the jurisdictional thresholds of 22 NYCRR § 202.70(a) are met (generally $500,000 in New York County and varying amounts elsewhere), Client will file in the Commercial Division of the Supreme Court, [________________________________] County.

5. FORCE MAJEURE AND EXCUSE

5.1 Counterparty is hereby notified that Client does not recognize any valid excuse for non-performance, including force majeure, impossibility, impracticability, or frustration of purpose. New York applies a narrow impossibility doctrine under Kel Kim Corp. v. Central Markets, Inc., 70 N.Y.2d 900 (1987), requiring an unforeseeable event that destroys the subject matter or means of performance.

5.2 If Counterparty intends to assert any such excuse, Counterparty must do so in writing within five (5) business days of receipt of this letter, identifying the specific contract provision relied upon and the supporting facts and evidence.

6. LITIGATION HOLD

Counterparty is formally instructed to preserve all documents, electronically stored information, text messages, Slack/Teams communications, email, voicemail, financial records, project management records, meeting notes, and third-party correspondence relating to the Agreement and the Outstanding Obligations. Spoliation sanctions under CPLR § 3126 and the standards of VOOM HD Holdings LLC v. EchoStar Satellite L.L.C., 93 A.D.3d 33 (1st Dep't 2012), and Pegasus Aviation I, Inc. v. Varig Logistica S.A., 26 N.Y.3d 543 (2015), will be sought for any destruction.

7. RESERVATION OF RIGHTS

7.1 This letter is made without prejudice to any right, claim, remedy, or defense of Client, all of which are expressly reserved.

7.2 No act or omission, including any discussion of possible cure, shall constitute a waiver of, or election among, Client's remedies.

7.3 This communication is made in anticipation of litigation and is not admissible to prove liability under CPLR § 4547.

8. GOVERNING LAW AND FORUM

8.1 This letter and the Agreement are governed by the substantive laws of the State of New York without regard to conflict-of-law principles, pursuant to N.Y. Gen. Oblig. Law § 5-1401 and the terms of the Agreement.

8.2 Any action to enforce the Agreement shall be brought in the Supreme Court of the State of New York, [________________________________] County, or the United States District Court for the [________________________________] District of New York, pursuant to N.Y. Gen. Oblig. Law § 5-1402 where applicable.

9. RESPONSE REQUIRED

Counterparty must respond to undersigned counsel in writing by no later than 5:00 p.m. Eastern Time on [__/__/____], providing:

1. ☐ Full cure of the Outstanding Obligations;
2. ☐ Written adequate assurance of future performance; or
3. ☐ A written explanation of any asserted defense or excuse.

Failure to respond will be treated as a definitive refusal to perform, and Client will proceed immediately with legal action.

10. EXECUTION

Respectfully submitted,

___________________________________
[________________________________], Esq.
[________________________________] (Firm Name)
[________________________________] (NY Office)
NY Attorney Reg. No.: [________________________________]
Tel: [________________________________]
E-mail: [________________________________]

Counsel for [________________________________]

Date: [__/__/____]

Enclosures:
- Copy of the Agreement
- Exhibit A: Timeline of Non-Performance
- Exhibit B: Prior Communications

cc: Client; Client Representative [________________________________]

Sources and References

• N.Y. U.C.C. § 2-609 — https://www.nysenate.gov/legislation/laws/UCC/2-609
• Norcon Power Partners, L.P. v. Niagara Mohawk Power Corp., 92 N.Y.2d 458 (1998)
• Sokoloff v. Harriman Estates Dev. Corp., 96 N.Y.2d 409 (2001)
• Kel Kim Corp. v. Central Markets, Inc., 70 N.Y.2d 900 (1987)
• Kenford Co. v. County of Erie, 73 N.Y.2d 312 (1989)
• VOOM HD Holdings LLC v. EchoStar Satellite L.L.C., 93 A.D.3d 33 (1st Dep't 2012)
• N.Y. CPLR §§ 5001, 5004, 6301, 3001
• 22 NYCRR § 202.70 (Commercial Division)

Disclaimer: This template is provided for informational purposes only and does not constitute legal advice. It must be reviewed and customized by a New York-licensed attorney before use.