In business and in life, contracts provide a foundation of trust. But what happens when one party begins to question whether the other side can or will perform as promised? Texas law, consistent with general contract principles, provides mechanisms for a party to demand assurancesof performance.

What Are “Assurances” in a Contract?

When you sign a contract, you take on legally enforceable obligations. If circumstances arise that reasonably cause one side to doubt whether the other side can perform—such as financial instability, missed deadlines, or contradictory statements—Texas law may entitle that concerned party to request adequate assurances of performance.

This means the party under suspicion must provide evidence or confirmation that they will, in fact, uphold their end of the bargain.

The Texas Framework

Texas recognizes the doctrine of demanding assurances both through case law and, in commercial contexts, through the Texas Business and Commerce Code (the Texas adoption of the Uniform Commercial Code, or UCC).

• UCC § 2.609 (Tex. Bus. & Com. Code § 2.609) applies to contracts for the sale of goods. If one party has reasonable grounds for insecurity, they may demand in writing adequate assurance of due performance. Until assurances are received, they may suspend their own performance if commercially reasonable.
• Failure to Provide Assurances: If the party does not respond within a reasonable time (not more than 30 days under the UCC), this failure itself can be treated as a repudiation of the contract.
• Common Law Contracts: Even outside of goods, Texas courts have recognized a similar right under common law principles. Where conduct creates justified doubt, demanding assurances protects the party who otherwise might be forced to perform blindly while risk looms.

When Is It Necessary to Demand Assurances?

You may need to request assurances when:

• A vendor misses key deadlines or delivers inconsistent quality.
• A counterparty expresses doubts about their ability to perform.
• Financial instability (bankruptcy filings, unpaid creditors, etc.) threatens performance.
• You receive contradictory instructions that undermine the agreed terms.

In each case, your goal is not to cancel the contract prematurely, but to secure clarity and protect yourself before committing further resources.

Practical Tips for Texas Businesses

1. Put It in Writing – Always make your demand for assurance in writing, citing the specific facts that create insecurity.
2. Be Reasonable – Texas law looks at whether your doubts are objectively reasonable, not just a hunch.
3. Suspend Performance Carefully – You may be entitled to suspend your own obligations, but do so only as allowed by the contract and law.
4. Document Everything – Keep records of communications and any assurance (or lack thereof) provided.

Conclusion

Under Texas law, you don’t have to proceed with blind faith when red flags appear in a contractual relationship. The right to request assurances provides a balanced tool—protecting your investment while giving the other party a fair chance to confirm their commitment.

If you are facing a situation where doubts about performance are rising, consulting an attorney familiar with Texas contract law can ensure you make the right move without exposing yourself to claims of breach.

At David C. Barsalou, Attorney at Law, PLLC, we help clients navigate business, family, tax, estate planning, and real estate matters ranging from document drafting to litigation with clarity and confidence. If you’d like guidance on your situation, schedule a consultation today. Call us at (713) 397-4678, email barsalou.law@gmail.com, or reach us through our Contact Page. We’re here to help you take the next step.