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Contracts Keyed to Farnsworth
Norcon Power Partners v. Niagara Mohawk Power Corp
Facts
The parties entered into a 25-year contract for the Defendant to purchase electricity from the Plaintiff at specified pricing schedules. The Defendant presented the Plaintiff with a letter stating that it believed that substantial credits in its favor would accrue to over $610 million. Anticipating that the Plaintiff would not be able to satisfy the daily escalating credits, the Defendant demanded that the Plaintiff provide adequate assurance that it will perform its repayment obligations. The Plaintiff thereafter initiated this suit to have declared that the Defendant had no right to demand adequate assurance under New York State law.
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