Contracts/Impracticability
Template:ContractLaw The doctrine of impracticability in the common law of contracts excuses performance of a duty, where that duty has become unfeasibly difficult or expensive for the party who was to perform. It is similar in some respects to the doctrine of impossibility because it is triggered by the occurrence of a condition, the nonoccurrence of which was a basic assumption of the contract. The major difference between impossibility and impracticability, however, is that while impossibility excuses performance where the contractual duty cannot physically be performed, the doctrine of impracticability comes into play where performance is still physically possible, but would be very burdensome for the party whose performance was due.
Typically, the test U.S. courts typically use for impracticability is as follows (with a few variations between jurisdictions):
- There must be an occurrence of a condition, the nonoccurrence of which was a basic assumption of the contract,
- The occurrence must make performance extremely expensive or difficult
- This difficulty was not anticipated by the parties to the contract (note: some jurisdictions require that there be no measure within the contract itself to allocate risk between the parties)
See e.g. Transatlantic Financing Corp. v. United States, 363 F.2d 312 (D.C. Cir., 1966)
Section 261 of the Restatement (Second) of Contracts does not explicitly define the scope of what is considered impracticable, as it is a fairly subjective and fact-intensive test for the courts. However, courts typically do not consider events as increases in prices or costs beyond a normal range to allow for discharge of duties on grounds of impracticability, as such events are normally foreseeable risks of fixed-price contracts.
Section 2-615 of the Uniform Commercial Code deals with impracticability in the context of sales of goods, and introduces some additional constraints on the parties. A party whose ability to perform his obligations has only been partially affected must allocate production and delivery among his customers in a manner which is fair and reasonable, affording each of them with partial performance, and must notify all purchasers that there will be delay, partial delivery, or non-delivery.
