Impracticability
Encyclopedia
The doctrine of impracticability in the common law
of contract
s excuses performance of a duty, where that duty has become unfeasibly difficult or expensive for the party who was to perform.
Impracticability is similar in some respects to the doctrine of impossibility
because it is triggered by the occurrence of a condition which prevents one party from fulfilling the contract. The major difference between the two doctrines 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 is due. Thus, impossibility is an objective
condition, whereas impracticability is a subjective
condition for a court to determine.
Typically, the test U.S. courts use for impracticability is as follows (with a few variations between jurisdictions):
does not explicitly define the scope of what is considered impracticable, as it is a fairly subjective and fact-intensive test for the courts. Generally, courts do not consider events such as an increase in price 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.
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. This is similar in some respects to the doctrine of general average
in admiralty law
.
According to note 4 under UCC 2-615, increased cost alone does not excuse performance unless the rise in cost is due to some unforeseen contingency which alters the nature of performance. It further explains that a change in market conditions resulting a rise or drop in prices is not sufficient to claim impracticability because the parties assumed that risk when the contract was made. The comments indicate that contingencies such as war
, embargo
, crop failures, or a failure of a major source of supply that causes the market change or prevents a seller from obtaining supplies necessary for his performance would justify a claim of impracticability.
Common law
Common law is law developed by judges through decisions of courts and similar tribunals rather than through legislative statutes or executive branch action...
of contract
Contract
A contract is an agreement entered into by two parties or more with the intention of creating a legal obligation, which may have elements in writing. Contracts can be made orally. The remedy for breach of contract can be "damages" or compensation of money. In equity, the remedy can be specific...
s excuses performance of a duty, where that duty has become unfeasibly difficult or expensive for the party who was to perform.
Impracticability is similar in some respects to the doctrine of impossibility
Impossibility
In contract law, impossibility is an excuse for the nonperformance of duties under a contract, based on a change in circumstances , the nonoccurrence of which was an underlying assumption of the contract, that makes performance of the contract literally impossible...
because it is triggered by the occurrence of a condition which prevents one party from fulfilling the contract. The major difference between the two doctrines 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 is due. Thus, impossibility is an objective
Objectivity (philosophy)
Objectivity is a central philosophical concept which has been variously defined by sources. A proposition is generally considered to be objectively true when its truth conditions are met and are "mind-independent"—that is, not met by the judgment of a conscious entity or subject.- Objectivism...
condition, whereas impracticability is a subjective
Subjectivity
Subjectivity refers to the subject and his or her perspective, feelings, beliefs, and desires. In philosophy, the term is usually contrasted with objectivity.-Qualia:...
condition for a court to determine.
Typically, the test U.S. courts 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 riskRisk of lossRisk of loss is a term used in the law of contracts to determine which party should bear the burden of risk for damage occurring to goods after the sale has been completed, but before delivery has occurred...
between the parties)
Restatement of Contracts
Section 261 of the Restatement (Second) of ContractsRestatement (Second) of Contracts
The Restatement of the Law of Contracts is one of the most well-recognized and frequently-cited legal treatises in all of American jurisprudence. Every first year law student in every law school in the United States is exposed to it, and it is probably the most-cited non-binding authority in all...
does not explicitly define the scope of what is considered impracticable, as it is a fairly subjective and fact-intensive test for the courts. Generally, courts do not consider events such as an increase in price 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.
Uniform Commercial Code
Section 2-615 of the Uniform Commercial CodeUniform Commercial Code
The Uniform Commercial Code , first published in 1952, is one of a number of uniform acts that have been promulgated in conjunction with efforts to harmonize the law of sales and other commercial transactions in all 50 states within the United States of America.The goal of harmonizing state law is...
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. This is similar in some respects to the doctrine of general average
General average
The law of general average is a legal principle of maritime law according to which all parties in a sea venture proportionally share any losses resulting from a voluntary sacrifice of part of the ship or cargo to save the whole in an emergency...
in admiralty law
Admiralty law
Admiralty law is a distinct body of law which governs maritime questions and offenses. It is a body of both domestic law governing maritime activities, and private international law governing the relationships between private entities which operate vessels on the oceans...
.
According to note 4 under UCC 2-615, increased cost alone does not excuse performance unless the rise in cost is due to some unforeseen contingency which alters the nature of performance. It further explains that a change in market conditions resulting a rise or drop in prices is not sufficient to claim impracticability because the parties assumed that risk when the contract was made. The comments indicate that contingencies such as war
War
War is a state of organized, armed, and often prolonged conflict carried on between states, nations, or other parties typified by extreme aggression, social disruption, and usually high mortality. War should be understood as an actual, intentional and widespread armed conflict between political...
, embargo
Embargo
An embargo is the partial or complete prohibition of commerce and trade with a particular country, in order to isolate it. Embargoes are considered strong diplomatic measures imposed in an effort, by the imposing country, to elicit a given national-interest result from the country on which it is...
, crop failures, or a failure of a major source of supply that causes the market change or prevents a seller from obtaining supplies necessary for his performance would justify a claim of impracticability.
See also
- Force majeureForce majeureForce majeure or vis major "superior force", also known as cas fortuit or casus fortuitus "chance occurrence, unavoidable accident", is a common clause in contracts that essentially frees both parties from liability or obligation when an extraordinary event or circumstance beyond the control of...
- ImpossibilityImpossibilityIn contract law, impossibility is an excuse for the nonperformance of duties under a contract, based on a change in circumstances , the nonoccurrence of which was an underlying assumption of the contract, that makes performance of the contract literally impossible...
and frustration of purposeFrustration of purposeIn the law of contracts, frustration of purpose is a defense to enforcement of the contract. Frustration of purpose occurs when an unforeseen event undermines a party's principal purpose for entering into a contract, and both parties knew of this principal purpose at the time the contract was made...
, two related doctrines