Excuse — Impossibility & Impracticability

This class is the doctrinal anchor for excuse. Two cases, two doctrines. Taylor v. Caldwell gives the classical impossibility theory through the burned-down music hall. Transatlantic Financing gives the modern impracticability test through the Suez closure — and shows how narrow the doctrine is in practice. Frustration of purpose (Krell v. Henry) moves to Class 41, so treat today as the doctrinal-density meeting and the post-break class as the consolidation.

Impossibility

R2d § 261. A party’s duty is discharged where, after the contract is made, performance is made impracticable without that party’s fault by the occurrence of an event the non-occurrence of which was a basic assumption on which the contract was made. The classical impossibility branch — destruction of a specific thing necessary for performance — is the easy case: when the very subject matter is gone, no one can perform, so both sides are excused. The court’s device is an implied condition that the thing will continue to exist.

Impracticability

R2d § 261; UCC § 2-615. Modern doctrine drops the fiction of literal impossibility and asks whether performance has become impracticable — possible only at excessive and unreasonable cost. The test has three gates: (1) a supervening event occurred; (2) the non-occurrence of that event was a basic assumption of the contract; and (3) the event made performance commercially impracticable without the affected party’s fault. Each gate is independent. A supervening, external event does not by itself excuse: the increase in burden must transform the bargain into one fundamentally different from what was contemplated. Increased cost alone, even substantial cost, is not enough — courts look for something closer to a tenfold increase before granting relief. Foreseeability is the recurring defeater: if the risk was reasonably foreseeable, the party is presumed to have accepted it.

Cases

Taylor v. Caldwell (K.B. 1863): the Surrey Music Hall burned before the contracted concerts. Because both parties implicitly assumed the hall would keep existing, its destruction without either party’s fault discharged both — the lessee from paying, the owner from delivering. This is impossibility by supervening destruction of the subject matter.

Transatlantic Financing v. United States (D.C. Cir. 1966): the Suez Canal closed, forcing a wheat shipper to sail around the Cape of Good Hope. The court announced the three-element impracticability test but denied excuse: the ship actually delivered the cargo, the contract did not specify the Suez route, and the roughly $44,000 of added expense on a $305,000 contract was not enough variation. The shipper, in the best position to insure against war risk, bore it.

What you should be able to do

Apply the implied-condition theory of Taylor to a destruction-of-subject-matter pattern, and run the three-element impracticability test from Transatlantic on a cost-overrun pattern — explaining why a modest overrun falls short and how foreseeability defeats the claim. Next class extends the analysis to frustration of purpose, where performance stays possible but its value evaporates.