S.B. 147                                                        VETOES

REMOVED OR BY ANY NECESSITY FOR REPLACING THEM. A PERSON ENTITLED TO
REIMBURSEMENT MAY REFUSE PERMISSION TO REMOVE UNTIL THE PARTY
SEEKING REMOVAL GIVES ADEQUATE SECURITY FOR THE PERFORMANCE OF THIS
OBLIGATION.

2A-311. PRIORITY SUBJECT TO SUBORDINATION

NOTHING IN THIS ARTICLE PREVENTS SUBORDINATION BY AGREEMENT BY
ANY PERSON ENTITLED TO PRIORITY.

SUBTITLE 4. PERFORMANCE OF LEASED CONTRACT: REPUDIATED, SUBSTITUTED,

AND EXCUSED

2A-401. INSECURITY: ADEQUATE ASSURANCE OF PERFORMANCE

(1)      A LEASE CONTRACT IMPOSES AN OBLIGATION ON EACH PARTY THAT THE
OTHER'S EXPECTATION OF RECEIVING DUE PERFORMANCE WILL NOT BE IMPAIRED.

(2)      IF REASONABLE GROUNDS FOR INSECURITY ARISE WITH RESPECT TO
THE PERFORMANCE OF EITHER PARTY, THE INSECURE PARTY MAY DEMAND IN
WRITING ADEQUATE ASSURANCE OF DUE PERFORMANCE. UNTIL THE INSECURE
PARTY RECEIVES THAT ASSURANCE, IF COMMERCIALLY REASONABLE, THE
INSECURE PARTY MAY SUSPEND ANY PERFORMANCE FOR WHICH HE (OR SHE) HAS
NOT ALREADY RECEIVED THE AGREED RETURN.

(3)      A REPUDIATION OF THE LEASE CONTRACT OCCURS IF ASSURANCE OF
DUE PERFORMANCE ADEQUATE UNDER THE CIRCUMSTANCES OF THE PARTICULAR
CASE IS NOT PROVIDED TO THE INSECURE PARTY WITHIN A REASONABLE TIME,
NOT TO EXCEED 30 DAYS AFTER RECEIPT OF A DEMAND BY THE OTHER PARTY.

(4)      BETWEEN MERCHANTS, THE REASONABLENESS OF GROUNDS FOR
INSECURITY AND THE ADEQUACY OF ANY ASSURANCE OFFERED MUST BE
DETERMINED ACCORDING TO COMMERCIAL STANDARDS.

(5)      ACCEPTANCE OF ANY NONCONFORMING DELIVERY OR PAYMENT DOES
NOT PREJUDICE THE AGGRIEVED PARTY'S RIGHT TO DEMAND ADEQUATE
ASSURANCE OF FUTURE PERFORMANCE.

2A-402. ANTICIPATORY REPUDIATION

IF EITHER PARTY REPUDIATES A LEASE CONTRACT WITH RESPECT TO A
PERFORMANCE NOT YET DUE UNDER THE LEASE CONTRACT, THE LOSS OF WHICH
PERFORMANCE WILL SUBSTANTIALLY IMPAIR THE VALUE OF THE LEASE
CONTRACT TO THE OTHER, THE AGGRIEVED PARTY MAY:

(A)     FOR A COMMERCIALLY REASONABLE TIME, AWAIT RETRACTION OF
REPUDIATION AND PERFORMANCE BY THE REPUDIATING PARTY;

(B)      MAKE DEMAND PURSUANT TO § 2A-401 AND AWAIT ASSURANCE OF
FUTURE PERFORMANCE ADEQUATE UNDER THE CIRCUMSTANCES OF THE
PARTICULAR CASE; OR

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