Excuse doctrine comparison
Performance & Breach · Mar 3
Taylor v. Caldwell, Transatlantic v. United States
Floor. ~40 min: R2d §§ 261, 263 + Taylor (impossibility). The doctrine the next class assumes you have covered.
Target. ~75 min: Floor + Transatlantic + UCC § 2-615 + force majeure + synthesis.
You rent an apartment with a balcony overlooking a major parade, and pay an above-market price for the view. A week before the event, the city cancels the parade for safety reasons.
Should you still pay full rent?
The apartment still exists. You can still occupy it. But the reason you paid the premium is gone. Hold two questions:
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.
If the existence of a specific thing is necessary for the performance of a duty, its failure to come into existence, destruction, or such deterioration as makes performance impracticable is an event the non-occurrence of which was a basic assumption on which the contract was made.
Impossibility excuses performance only when no one could perform — not merely when this party finds it hard. The classic triggers:
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 impracticable by the occurrence of a contingency the non-occurrence of which was a basic assumption on which the contract was made or by compliance in good faith with any applicable foreign or domestic governmental 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, he 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.
3 B. & S. 826, 122 Eng. Rep. 309 (K.B. 1863)
Court of King's Bench
Rule. 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.
Impracticability is the flexible cousin of impossibility: performance is still possible, but a supervening event has made it so extreme that the law treats it as effectively impossible. Transatlantic gives the three-step test:
1. A contingency occurred — something unexpected supervened after formation.
2. The risk was not allocated — by agreement, by custom, or by trade usage — so its non-occurrence was a basic assumption of the deal.
3. Performance became commercially impracticable — possible only at excessive and unreasonable cost.
A thing is "impracticable when it can only be done at an excessive and unreasonable cost." Added expense alone, where the promisor accepted some abnormal risk, is not enough.
363 F.2d 312 (D.C. Cir. 1966)
United States Court of Appeals for the District of Columbia Circuit
Rule. 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.
Facts. Caterer contracts with Stadium in October 2020 to provide food service for Super Bowl LV (February 2021) for $500,000, with $200,000 deposit. In December 2020, the NFL announces the game will have a 25% reduced capacity due to COVID-19 restrictions. Caterer is told he can still set up service but must purchase the same supplies for fewer guests. Caterer wants out; Stadium refuses to return the deposit.
Question. Excuse by impracticability under R2d § 261?
Answer. Three-element test:
(1) Supervening event: yes, the capacity restriction announcement post-formation.
(2) Basic assumption: marginal. By October 2020, COVID was ongoing for seven months. Capacity restrictions were foreseeable. Most courts say pandemic disruption was a foreseeable risk by mid-2020.
(3) Impracticable performance: no. Caterer can still perform; revenue is the same; cost is the same. The market harm is to ticket sales, not catering operations. (If Caterer is paid per guest rather than flat fee, that''s a different case.)
Result: no excuse. Caterer owes performance. The lesson: foreseeability defeats impracticability. After March 2020, COVID-related events generally were foreseeable as a category of risk.
Compare with frustration of purpose (next class), would frustration apply if Caterer''s revenue depended on the per-guest fee?
For sales of goods, UCC § 2-615 codifies commercial impracticability: a seller is excused where performance becomes impracticable because of a contingency "the non-occurrence of which was a basic assumption" of the contract. Two wrinkles distinguish it from the common law:
Facts. Auctioneer sells Lot 1285, a 1962 Ferrari 250 GTO, for $48 million at auction. Before delivery, the car is destroyed in a transport-truck fire. Seller pleads impossibility. Buyer says the contract was for "a 1962 Ferrari 250 GTO" generally and demands a different one or full damages.
Question. Is performance excused?
Answer. UCC § 2-613 (goods destroyed when risk has not passed): if specifically identified goods suffer total loss before risk passes and without fault of either party, the contract is avoided. The key is specific identification. Lot 1285 specified VIN, history, and condition, not "a Ferrari." Only ~36 of these were made. The car is unique.
Result: contract avoided under § 2-613(a). If risk had passed to buyer (typically on delivery), buyer bears the loss; if not, contract is voided. Compare with fungible goods (Transatlantic''s wheat), fungibility defeats the specific-identification argument.
The deeper point: impossibility/impracticability doctrine is calibrated to whether the destroyed thing is the thing or a thing. Specific identification narrows the duty; fungibility expands it.
Stretch problems from the chapter.
Rules. R2d § 261, UCC § 2-615.
Cases. Taylor v. Caldwell · Transatlantic Financing Corp. v. United States.
Open question. Impossibility and impracticability address cases where performance becomes too hard. What about cases where performance is still possible, but pointless because the purpose has evaporated? Next class: frustration of purpose (Krell v. Henry; Adbar v. New Beginnings).
Next class: Frustration of Purpose + Spring Break Reset
_Performance & Breach_ · Mar 4
Read Krell v. Henry. Henry rented a room to watch Edward VII's coronation. The king fell ill; the procession was cancelled. Performance remained possible (the room was still there) but the reason for the bargain was gone. When the purpose evaporates but performance does not, who bears the loss? Come ready to answer. You may be called.