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  • Loyola University Chicago Law Journal Volume 6 Issue 3 Summer 1975 Article 4

    1975

    The Doctrine of Impossibility of Performance and the Foreseeability Test Charles G. Brown

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    Recommended Citation Charles G. Brown, The Doctrine of Impossibility of Performance and the Foreseeability Test, 6 Loy. U. Chi. L. J. 575 (1975). Available at: http://lawecommons.luc.edu/luclj/vol6/iss3/4

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  • The Doctrine of Impossibility of Performance and the Foreseeability Test

    The doctrine of impossibility is a concept in the law of contracts used to grant relief to a promisor whose contractual performance be- comes vitally different from what had reasonably been expected of him due to the occurrence of a supervening event.' Generally speak- ing, until 1863 impossibility of performance was not a defense to an action for damages arising out of nonperformance. Taylor v. Caldwell2 presented the first general formulation of the doctrine of impossibility. In Taylor, an owner of a music hall was relieved of his liability to pay damages for failing to have the hall available under the terms of the lease when prior to the time of performance, the hall was accidently destroyed by fire. The court granted relief on the principle that:

    in contracts in which the performance depends on the continued existence of a given person or thing, a condition is implied that the impossibility of performance arising from the perishing of the per- son or thing shall excuse the performance. 3

    Because of the principle's limited scope, relief was given only where performance became impossible by certain types of superven- ing events such as: the death or incapacity of a person whose services were the subject of the contract; the destruction of the specific thing

    1. For a general discussion of the doctrine of impossibility of performance see 6 A. ConIN, CONTRACTS, §§ 1320-72 (1962) [hereinafter cited as CoRNla]; 6 S. WILLISTON, CONTRACTS, §§ 1931-79 (rev. ed. S. Williston & G. Thompson 1938) [hereinafter cited as WILLISTON]; Patterson, Constructive Conditions in Contracts, 42 COLUM. L. REv. 901, 943 (1942) [hereinafter cited as Patterson]; Schlegel, Of Nuts and Ships and Sealings Wax, Suez and Frustrating Things-The Doctrine of Impossi- bility of Performance, 23 RUTGERS L. REv. 419 (1969) [hereinafter cited as Schlegel]; Note, The Fetish of Impossibility in the Law of Contracts, 53 COLUM. L. Rv. 94 (1953) [hereinafter cited as The Fetish of Impossibility].

    For the English treatment, see generally J. CHrTY, CHrrry ON CONrRACrs, §§ 1261- 1307 (1968); R. MCELRoY, IMPossriLrrY OF PERFORMANCE (1941) [hereinafter cited as McELRoY]; Aubrey, Frustration Reconsidered--Some Comparative Aspects, 12 INT'L AND COMpA TIVE LAW QUARTERLY 1165 (4th series 1963) [hereinafter cited as Aubrey].

    2. 122 Eng. Rep. 309 (1863). 3. Id. at 314.

  • Loyola University Law Journal Vol. 6: 575

    that was contracted for or was essential to performance; or the prohi- bition of performance by a subsequent change in the law.4

    The common law trend has been to expand the number and kind of situations in which a party may invoke impossibility of performance as a defense. Today, "[a] thing is impossible in legal contemplation when it is not practicable; and a thing is impracticable when it can only be done at an excessive and unreasonable cost."5 The most mod- em formulations of the doctrine of impossibility are found in section 2-615 of the Uniform Commercial Code6 and section 281 of the Pro- posed Draft of the Restatement of Contracts.7 Under the provisions of the Code and Restatement, three conditions must be met if the promi- sor is to be discharged from his obligation: (1) the performance must be made impracticable by (2) the occurrence of a contingency, (3) the non-occurrence of which was a basic assumption on which the contract was entered.8

    Traditionally, one of the conditions required for the application of

    4. See L. SIMPSON, CONTRACTS, §§ 176-78 (1965); WILLISTON, supra note 1, § 1935; RESTATEMENT OF THE LAW OF CONTRACTS §§ 458-61 (1932).

    5. Mineral Park Land Co. v. Howard, 172 Cal. 289, 293, 156 P. 458, 460 (1916) (citation omitted); City of Veron v. City of Los Angeles, 45 Cal. 2d 710, 290 P.2d 841 (1955).

    6. Section 2-615 of the UNIFORM COMMERCIAL CODE provides: Except so far as a seller may have assumed a greater obligation and subject

    to the preceding section on substituted performance: (a) Delay in delivery or non-delivery in whole or in part by a seller who

    complies with paragraphs (b) and (c) is not a breach of his duty under a contract for sale if performance as agreed has been made impractica- ble by the occurrence of a contingency the non-occurrence of which was a basic assumption on which the contract was made or by compli- ance in good faith with any applicable foreign or domestic govern- mental regulation or order whether or not it later proves to be invalid.

    (b) Where the causes mentioned in paragraph (a) affect only a part of the seller's capacity to perform, hse must allocate production and deliveries among his customers but may at his option include regular customers not then under contract as well as his own requirements for further manufacture. He may so allocate in any manner which is fair and reasonable.

    (c) The seller must notify the buyer seasonably that there will be delay or non-delivery and, when allocation is required under paragraph (b), of the estimated quota thus made available for the buyer.

    7. Section 281 of the proposed draft of the RESTATEMENT OF THE LAw (SECOND) OF CONTRACTS (Tent. Draft No. 9, 1974) provides:

    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 indi- cate the contrary.

    8. For a discussion of the doctrine of impossibility as now formulated in U.C.C. § 2-615 see Symposium, The U.C.C. and Contract Law: Some Selected Problems, 105 U. PA. L. REV. 837, 880 (1957) [hereinafter cited as Symposium]; Gilbride, The Uni- form Commercial Code: Impact on the Law of Contracts, 30 BROOKLYN L. REv. 197-98 (1964); Spies, Article 2: Breach, Repudiation and Excuse, 30 Mo. L. REv. 225, 253 (1965) [hereinafter cited as Spies].

    576

  • Impossibility Doctrine

    the doctrine of impossibility was that the event which made perform- ance impossible must have been unforeseen by the parties at the time the contract was made.9 Where the event was found to be foreseeable, courts have denied relief unless the party seeking relief had provided for the contingency in his contract.' ° In this situation, if the event was foreseeable, courts inferred that since the party did not provide for the contingency, he assumed the risk of its occurrence. Consequently, courts held the party liable for damages even though his performance might have been commercially impracticable. Considering the tradi- tional legal rationale used for granting relief under the doctrine of im- possibility, this conclusion by the courts seems proper. For if relief is premised on the notion that the parties intended that a state of facts remain unchanged, the foreseeability of the event would bar courts from finding such an intention with regard to an event that was fore- seeable.

    The modem legal rationale of impossibility is not premised on the intention of the parties as to the continued existence of a state of facts; rather, it is based on the court's balancing the community's interest in having contracts enforced according to their terms against the com- mercial senselessness of requiring performance." Both the Code and Restatement adopt this rationale through the use of the term "imprac- ticable" as opposed to "impossible."

    Because of the expansion of the doctrine of impossibility, a number of writers have expressed their dissatisfaction with the continued use of the foreseeability test as a barrier to the application of the doctrine of impossibility.' 2 The argument against the use of foreseeability is

    9. See 17A C.J.S. Contracts § 463(2) (1963); 17 AM. JuR. 2d Contracts § 406 (1964).

    10. See, e.g., Chicago, M. & St. P. R.R. v. Hoyt