This chapter considers when unforeseen events excuse performance because carrying out the bargain has become impracticable or pointless. Denethor’s Madness gives the doctrine narrative force by showing how a supervening collapse in circumstances can overwhelm original expectations.
Doctrinal map
Three doctrines cluster here. Impossibility (R2d § 261; Taylor v. Caldwell — destruction of the thing essential to performance). Impracticability (R2d § 261; UCC § 2-615; Transatlantic Financing — closure of the Suez Canal and a 30% cost increase fall short). Frustration of purpose (R2d § 265; Krell v. Henry — the King’s coronation procession). The student should leave able to distinguish the three and explain why each is narrow.
Key Sources
Key Rules
- R2d § 261: Impracticability — supervening event makes performance impracticable
- R2d § 265: Frustration of purpose — supervening event destroys purpose
- UCC § 2-615: Commercial impracticability
Cases
- Taylor v. Caldwell 3 B. & S. 826, 122 Eng. Rep. 309 (K.B. 1863) Where the continued existence of a specific thing essential to performance is implicitly assumed by the parties, the destruction of that thing without fault of either party discharges both from performance. This is the doctrine of impossibility by supervening destruction of the subject matter.
- Krell v. Henry [1903] 2 K.B. 740 (C.A.) Where the principal purpose of a contract is frustrated by a supervening event not the fault of either party and not within the risks the parties allocated, performance is excused. Frustration of purpose differs from impossibility: performance remains possible, but its value has evaporated.
- Transatlantic Financing Corp. v. United States 363 F.2d 312 (D.C. Cir. 1966) Commercial impracticability requires (1) a supervening event, (2) the non-occurrence of which was a basic assumption of the contract, and (3) the event made performance impracticable without the affected party's fault. Increased cost alone is not enough; the increase must transform the bargain into one fundamentally different from that contemplated.