## Facts

- By-Lo Oil Co., Inc. contracted with ParTech, Inc. to purchase and service computer software systems used to manage By-Lo’s businesses, including ongoing monthly support and maintenance.
- In January 1998, By-Lo demanded details on when and how ParTech would make the software Year 2000 (Y2K) compliant before December 31, 1999.
- ParTech responded that it was reviewing information regarding Y2K compliance and would inform By-Lo once a decision was made.
- By mid-1998, By-Lo believed time was running short and bought a new Y2K-compliant hardware and software system; it did not inform ParTech of this replacement decision.
- In November 1998, ParTech stated it would supply the needed Y2K software at no cost and indicated installation should occur before January 1, 1999.
- In December 1998, ParTech sent the Y2K software with installation instructions, but By-Lo did not install it because it had already purchased a new system.
- By-Lo sued, alleging ParTech’s delay and lack of specific assurances constituted anticipatory breach/repudiation under Michigan’s UCC adequate-assurance and anticipatory-repudiation provisions.

## Issues

1. Whether By-Lo stated a breach claim based on the contract’s software-modification provisions despite not making a modification request under the contract’s terms.
2. Whether By-Lo had reasonable grounds for insecurity permitting a demand for adequate assurance under UCC § 2-609.
3. Whether ParTech’s responses and timing amounted to inadequate assurance or anticipatory repudiation under UCC § 2-610, justifying By-Lo’s replacement purchase and damages claim.

## Decision

- The Sixth Circuit affirmed summary judgment for ParTech.
- By-Lo lacked a valid claim under the contract’s modification provision because it did not make a modification request as contemplated by the contract.
- By-Lo failed to show reasonable grounds for insecurity under UCC § 2-609, particularly given the early timing and absence of prior nonperformance by ParTech.
- ParTech’s communications and later delivery of Y2K software constituted adequate assurance and did not clearly indicate an intent not to perform; therefore, there was no repudiation under UCC § 2-610.

## Legal Principles

- A buyer may demand adequate assurance of performance under UCC § 2-609 only when it has reasonable grounds for insecurity; absent such grounds, a demand does not create a right to treat the contract as repudiated.
- Adequate assurance may be established by a seller’s statements and conduct showing ongoing intent and ability to perform; it need not include immediate, detailed technical specifications if performance is not yet due.
- Anticipatory repudiation under UCC § 2-610 requires a clear indication the obligor will not perform; delay or non-specific assurances, without more, do not constitute repudiation when performance remains feasible.
- Contractual modification remedies depend on the contract’s invocation requirements; a party cannot recover for failure to modify absent a request that triggers the modification obligation.

## Conclusion

The court held that By-Lo could not recover on an anticipatory-breach theory because it neither properly triggered any contract-based modification duty nor established reasonable grounds for insecurity, and ParTech’s responses and subsequent delivery of Y2K software provided adequate assurance rather than repudiation.


By-Lo Oil Co. v. ParTech, Inc., 11 F. App’x 538 (6th Cir. 2001)