III. US Law
Like English law, US allows for the contract to be discharged on the grounds of impossibility…
But there is one key difference at least on a doctrinal level: US law expressly recognizes…
“Where, after a contract is made, a party’s performance is made impracticable without his fault by the occurrence of an event the non-occurrence of which was a basic assumption on which the contract was made, his duty to render that performance is discharged, unless the language or the circumstances indicate the contrary.”…
Very broadly the elements for the impracticability excuse are: …
(1) an event occurred making performance impracticable; …
(2) the non- occurrence of that event must have been a basic assumption on which…
(3) the event was not caused by the party seeking excuse; and…
(4) the risk of the event occurring was not allocated to the party seeking excuse.…
Caselaw has also imposed a requirement that the event must be unforeseeable. …
The leading and first case that introduced the impracticability doctrine in US law…
a. This case concerned a contract whereby the defendants agreed to take all the gravel…
b. Only half of the gravel was taken when the plaintiff sued the defendant for not…
c. The plaintiff’s claim was rejected because the court held that the remaining gravel…
d. The court expressly founded its reasoning on the impracticability of the contract…
English law would not reach the same result because it does not recognize a doctrine…
At the level of principle then one is at what would appear to be a rather useful…
But in practice the doctrine is applied very rarely. As one academic recently observed:
“Despite the hope that section 2-615 and section 261 would lead to wide acceptance of commercial impracticability both under Article 2 and the common law, courts continue to rarely excuse a party under the doctrine of commercial impracticability. Even more rare, are judicial decisions discussing commercial impracticability in any meaningful way. The few cases that do discuss it developed muddled and inconsistent rules, leading to an unpredictable and confusing doctrine that fails to serve its intended purpose.”…
There are a number of reasons for this:…
a. In the typical case it is market fluctuation that creates the impracticability,…
b. If the contract contains mechanisms such as price review clauses, the court tends…
c. US law, like England, sometimes considers long term contract as being speculative…
The application of the impracticability doctrine has not made the difference one…
This is why there have been multiple critiques of the US law position whereby scholars…
a. Framers of the doctrine expected it to be used in a wider variety of circumstances…
b. The criterion that foreseeability disentitles you to the excuse is, to some, “unwarranted…
i. Neither the UCC nor the Restatement speak of foreseeability. …
ii. The foreseeability defence assumes parties have allocated their risks, but that…
This last point is interesting. The subject of this conference is “unforeseen” circumstances.…
a. Why is “unforeseen” necessary especially in the impracticable type scenario?b. And some US courts have not looked at what was or was not actually foreseen by…
c. What degree of foreseeability is needed? Some academics suggest that for Anglo-American…
d. Is it enough to just see that the event was foreseeable or does one need foresee…
It is fair to say there is no consensus over the answers to the above questions.…
a. The answer to the above questions may not be the same and may depend on the which…
b. Detailed studies of the foresight and foreseeability criteria have set out some…
i. Degree of foreseeability: A preference has been expressed for a high degree of foreseeability. Here it is worth noting a recent case where the court warned against either being too liberal in applying the foreseeability test (that is a low degree of foreseeability) or imposing a high degree of fo-
ii. Extent of foreseeability: It isn’t enough for the event to be foreseeable.…
Beyond the relatively restrictive way the doctrines of impracticability and frustration…
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