Page 21: of Marine News Magazine (February 2016)

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T UCC A situation. In this example, the customer could provide as-

HE IN CTION

By means of an example, let’s look at a fuel distributor surance by providing you ? nancial information or putting who provides products to certain customer pursuant to a up some additional money or collateral as security. The credit agreement. Although the commercial relationship ability to make a demand for assurance works for both continues to proceed in a customary fashion, you receive sides of an agreement. Additional examples when a de- news that one of your customers is having ? nancial trouble mand for assurance could be used include: and may have trouble paying its bills in the near future. If • A ship owner demanding assurance from a shipyard you are concerned that they may ultimately not be able to that a vessel will be completed; pay you for the fuel that they purchase on credit, you can • Any company that is concerned that another use the adequate assurance provision included in Section company will be unable to deliver a good or service 2-609 to demand assurance that they have the ability to in the future; or pay you for the fuel before you provide additional credit. • Any situation where you are providing goods or

If the customer is unable, or unwilling, to provide some services on credit and you have concerns about reasonable assurance that they can pay you for your fuel, the customer’s ability to pay.

you have the ability to terminate the agreement prior to the customer defaulting on your agreement. T UCC PHE RIMER

Any assurance provided by the customer must be com- Making a demand for assurance is easy. The demand mercially reasonable and will depend upon your particular can be made by sending a simple letter to your customer. 21

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