The doctrine, known as demand for adequate assurance of future performance, is at the heart of a Federal lawsuit that stems from a 1989 contract between Norcon Power Partners, L.P., an independent power producer, and Niagara Mohawk Power Corporation, a public utility provider. Niagara Mohawk undertook to purchase electricity generated at Norcon's Pennsylvania facility. The contract was for 25 years, but the differences emerged during the early years of the arrangement.
The case arrives on this Court's docket by certification of the substantive law question from the United States Court of Appeals for the Second Circuit. Our Court is presented with an open issue that should be settled within the framework of New York's common-law development. We accepted the responsibility to address this question involving New York contract law:
As framed by the particular dispute, we answer the law question in the affirmative with an appreciation of this Court's traditional common-law developmental method, and as proportioned to the precedential sweep of our rulings.
The Second Circuit Court of Appeals describes the three pricing periods, structure and details as follows:
In February 1994, Niagara Mohawk presented Norcon with a letter stating its belief, based on revised avoided cost estimates, that substantial credits in Niagara Mohawk's favor would accrue in the adjustment account during the second pricing period. "[A]nalysis shows that the Cumulative Avoided
Norcon promptly sued Niagara Mohawk in the United States District Court, Southern District of New York. It sought a declaration that Niagara Mohawk had no contractual right under New York State law to demand adequate assurance, beyond security provisions negotiated and expressed in the agreement. Norcon also sought a permanent injunction to stop Niagara Mohawk from anticipatorily terminating the contract based on the reasons described in the demand letter. Niagara Mohawk counterclaimed. It sought a counter declaration that it properly invoked a right to demand adequate assurance of Norcon's future payment performance of the contract.
The District Court granted Norcon's motion for summary judgment. It reasoned that New York common law recognizes the exceptional doctrine of demand for adequate assurance only when a promisor becomes insolvent, and also when the statutory sale of goods provision under UCC 2-609, is involved. Thus, the District Court ruled in Norcon's favor because neither exception applied, in fact or by analogy to the particular dispute (decided sub nom. Encogen Four Partners v Niagara Mohawk Power Corp., 914 F.Supp. 57).
The Second Circuit Court of Appeals preliminarily agrees (110 F.3d 6, supra) with the District Court that, except in the case of insolvency, no common-law or statutory right to demand adequate assurance exists under New York law which would affect non-UCC contracts, like the instant one. Because of the uncertainty concerning this substantive law question the Second Circuit certified the question to our Court as an aid to its correct application of New York law, and with an eye toward settlement of the important precedential impact on existing and future non-UCC commercial law matters and disputes.
Our analysis should reference a brief review of the evolution of the doctrine of demands for adequate assurance. Its roots spring from the doctrine of anticipatory repudiation (see, Garvin, Adequate Assurance of Performance: Of Risk, Duress, and Cognition, 69 U Colo L Rev 71, 77 ). Under that familiar precept, when a party repudiates contractual duties
That switch in performance expectation and burden is readily available, applied and justified when a breaching party's words or deeds are unequivocal. Such a discernible line in the sand clears the way for the nonbreaching party to broach some responsive action. When, however, the apparently breaching party's actions are equivocal or less certain, then the nonbreaching party who senses an approaching storm cloud, affecting the contractual performance, is presented with a dilemma, and must weigh hard choices and serious consequences. One commentator has described the forecast options in this way:
The Uniform Commercial Code settled on a mechanism for relieving some of this uncertainty. It allows a party to a contract for the sale of goods to demand assurance of future performance from the other party when reasonable grounds for insecurity exist (see, UCC 2-609; II Farnsworth, Contracts § 8.23). When adequate assurance is not forthcoming, repudiation is deemed confirmed, and the nonbreaching party is allowed to take reasonable actions as though a repudiation had occurred (see, 4 Anderson, Uniform Commercial Code § 2-609:3 [3d ed 1997 rev]).
UCC 2-609 provides, in relevant part:
In theory, this UCC relief valve recognizes that "the essential purpose of a contract between commercial [parties] is actual performance * * * and that a continuing sense of reliance and security that the promised performance will be forthcoming when due, is an important feature of the bargain" (UCC 2-609, Comment 1). In application, section 2-609 successfully implements the laudatory objectives of quieting the doubt a party fearing repudiation may have, mitigating the dilemma flowing
Indeed, UCC 2-609 has been considered so effective in bridging the doctrinal, exceptional and operational gap related to the doctrine of anticipatory breach that some States have imported the complementary regimen of demand for adequate assurance to common-law categories of contract law, using UCC 2-609 as the synapse (see, e.g., Lo Re v Tel-Air Communications, 200 N.J.Super. 59, 490 A.2d 344 [finding support in UCC 2-609 and Restatement (Second) of Contracts § 251 for applying doctrine of adequate assurance to contract to purchase radio station]; Conference Ctr. v TRC — The Research Corp. of New England, 189 Conn. 212, 455 A.2d 857 [analogizing to UCC 2-609, as supported by Restatement (Second) of Contracts § 251, in context of constructive eviction]).
Commentators have helped nudge this development along. They have noted that the problems redressed by UCC 2-609 are not unique to contracts for sale of goods, regulated under a purely statutory regime. Thus, they have cogently identified the need for the doctrine to be available in exceptional and qualifying common-law contractual settings and disputes because of similar practical, theoretical and salutary objectives (e.g., predictability, definiteness, and stability in commercial dealings and expectations) (see, e.g., Campbell, op. cit., at 1299-1304; see generally, White, Eight Cases and Section 251, 67 Cornell L Rev 841 ; Dowling, op. cit.).
The American Law Institute through its Restatement (Second) of Contracts has also recognized and collected the authorities supporting this modern development. Its process and work settled upon this black letter language:
Modeled on UCC 2-609, Restatement § 251 tracks "the principle that the parties to a contract look to actual performance `and that a continuing sense of reliance and security that the promised performance will be forthcoming when due, is an important feature of the bargain'" (Restatement [Second] of Contracts § 251, comment a, quoting UCC 2-609, Comment 1). The duty of good faith and fair dealing in the performance of the contract is also reflected in section 251 (see, Restatement [Second] of Contracts § 251, comment a).
Some States have adopted Restatement § 251 as their common law of contracts, in varying degrees and classifications (see, e.g., Carfield & Sons v Cowling, 616 P.2d 1008 [Colo] [construction contract]; Spitzer Co. v Barron, 581 P.2d 213 [Alaska] [construction contract]; Drinkwater v Patten Realty Corp., 563 A.2d 772 [Me] [sale of real estate]; Jonnet Dev. Corp. v Dietrich Indus., 316 Pa.Super. 533, 463 A.2d 1026 [real estate lease]; but see, Mollohan v Black Rock Contr., 160 W.Va. 446, 235 S.E.2d 813 [declining to adopt section 251, except to the extent that failure to give adequate assurance on demand may be some evidence of repudiation]).
New York, up to now, has refrained from expanding the right to demand adequate assurance of performance beyond the Uniform Commercial Code (see, Sterling Power Partners v Niagara Mohawk Power Corp., 239 A.D.2d 191, appeal dismissed 92 N.Y.2d 877; Schenectady Steel Co. v Trimpoli Gen. Constr. Co., 43 A.D.2d 234, affd on other grounds 34 N.Y.2d 939). The only other recognized exception is the insolvency setting (see, Hanna v Florence Iron Co., 222 N.Y. 290; Pardee v Kanady, 100 N.Y. 121; Updike v Oakland Motor Car Co., 229 App Div 632). Hence, the need for this certified question emerged so this Court could provide guidance towards a correct resolution of the Federal lawsuit by settling New York law with a modern pronouncement governing this kind of contract and dispute.
This Court's jurisprudence, however, usually evolves by deciding cases and settling the law more modestly (Rooney v Tyson, 91 N.Y.2d 685, 694, citing Cardozo, Nature of the Judicial Process, in Selected Writings of Benjamin Nathan Cardozo, at 115, 134 [Margaret E. Hall ed 1947] [observing that Judges proceed interstitially]). The twin purposes and functions of this Court's work require significant professional discipline and judicious circumspection.
We conclude, therefore, that it is unnecessary, while fulfilling the important and useful certification role, to promulgate so sweeping a change and proposition in contract law, as has been sought, in one dramatic promulgation. That approach might clash with our customary incremental common-law developmental process, rooted in particular fact patterns and keener wisdom acquired through observations of empirical application of a proportioned, less than absolute, rule in future cases.
It is well to note the axiom that deciding a specific case, even with the precedential comet's tail its rationale illuminates, is very different from enacting a statute of general and universal application (see, Breitel, The Lawmakers, 2 Benjamin N. Cardozo Memorial Lectures 761, 788  ["(P)rocedurally, courts are limited to viewing the problem as presented in a litigated case within the four corners of its record. A multiplication of cases will broaden the view because of the multiplication of records, but the limitation still persists because the records are confined by the rules of procedure, legal relevance, and evidence."]).
Experience and patience thus offer a more secure and realistic path to a better and fairer rule, in theory and in practical application. Therefore, this Court chooses to take the traditionally subtler approach, consistent with the proven benefits of the maturation process of the common law, including in the very area of anticipatory repudiation which spawns this relatively newer demand for assurance corollary (see, Garvin, op. cit., at 77-80; Robertson, op. cit., at 307-310; Dowling, op. cit., at 1359-1362; see also, Breitel, op. cit., at 781-782 
This Court is now persuaded that the policies underlying the UCC 2-609 counterpart should apply with similar cogency for the resolution of this kind of controversy. A useful analogy can be drawn between the contract at issue and a contract for the sale of goods. If the contract here was in all respects the same, except that it was for the sale of oil or some other tangible commodity instead of the sale of electricity, the parties would unquestionably be governed by the demand for adequate assurance of performance factors in UCC 2-609. We are convinced to take this prudent step because it puts commercial parties in these kinds of disputes at relatively arm's length equilibrium in terms of reliability and uniformity of governing legal rubrics. The availability of the doctrine may even provide an incentive and tool for parties to resolve their own differences, perhaps without the necessity of judicial intervention. Open, serious renegotiation of dramatic developments and changes in unusual contractual expectations and qualifying circumstances would occur because of and with an eye to the doctrine's application.
The various authorities, factors and concerns, in sum, prompt the prudence and awareness of the usefulness of recognizing the extension of the doctrine of demand for adequate assurance, as a common-law analogue. It should apply to the type of long-term commercial contract between corporate entities entered into by Norcon and Niagara Mohawk here, which is complex and not reasonably susceptible of all security features being anticipated, bargained for and incorporated in the original contract. Norcon's performance, in terms of reimbursing Niagara Mohawk for credits, is still years away. In the meantime, potential quantifiable damages are accumulating and Niagara Mohawk must weigh the hard choices and serious consequences that the doctrine of demand for adequate assurance is designed to mitigate. This Court needs to go no further in its promulgation of the legal standard as this suffices to declare a dispositive and proportioned answer to the certified question.
Accordingly, the certified question should be answered in the affirmative.
Following certification of a question by the United States Court of Appeals for the Second Circuit and acceptance of the question by this Court pursuant to section 500.17 of the Rules of the Court of Appeals (22 NYCRR 500.17), and after hearing argument by counsel for the parties and consideration of the briefs and the record submitted, certified question answered in the affirmative.