R2d § 261
Discharge by Supervening Impracticability
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.
Professor's notes
Elements: 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.
Taylor v. Caldwell operationalizes: music hall destroyed by fire; existence of the hall was a basic assumption; discharge.
Transatlantic Financing v. United States shows the limit: Suez closure increased cost but did not make performance impracticable.
Common misunderstanding: students treat any increased cost or hardship as impracticability. The bar is high: performance must be commercially impracticable, not merely more expensive. Cost increases of 10x-20x have been held insufficient. The risk-allocation question (§ 154-style) is the gating issue.
Cases that operationalize this rule
Text
R2d § 261. Discharge by Supervening Impracticability.
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.