Wednesday, December 25, 2013

Norcon Power Partners, L.P. v. Niagara Mohawk Power Corp. case brief

Norcon Power Partners, L.P. v. Niagara Mohawk Power Corp. case brief summary
705 N.E.2d 656 (1998)

Appellant, public utility challenged an order by the U.S. Court of Appeals, Second Circuit (New York), which granted summary judgment to appellee independent power company.

Appellant public utility company entered into a contract with appellee an independent power producer for a 25 year period. Appellant sought reversal of the summary judgment granted to appellee that held that although presently solvent, appellee had a duty to give adequate assurances to appellant when demanded. Appellant wanted the assurances because appellee would owe appellant over 610 million dollars by the end of the contract period, and it was genuinely worried that appellee would not be able to pay the vast sum.


  • The court held that appellant was entitled to adequate assurances from appellee under common law, and Uniform Commercial Code (U.C.C.). 
  • The court held that it was improper for the lower courts to grant summary judgment to appellee which held that only an insolvent party to a contract was entitled to adequate assurances. 
  • It also held that under Common Law and the U.C.C., appellant was entitled to assurances when he demanded them. 
  • It said that even though appellee was not insolvent, and the contract was one for the sale of goods under the U.C.C., both avenues were open to appellant because it was reasonable under the circumstances for it to demand assurances.
The court answered the question affirmatively about whether a party to a contract could seek adequate assurances regarding performance even though there was no insolvency, and contract was for sale of goods. It held that appellant public utility could lawfully obtain adequate assurances even though technically appellee independent power company was not yet insolvent, and even though the contract was governed under the Uniform Commercial Code.

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