Anaya Nolan
The doctrine of impossibility, or impossibility of performance, is a concept in contract law that can be used as a defence for the nonperformance of contractual duties. This occurs when a change in circumstances (or the discovery of pre-existing circumstances) makes it impossible to fulfil the terms of a contract. For example, if a house burns down, a painter is excused from their contractual obligation to paint it. Impossibility can also refer to circumstances where performance can only be achieved at an excessive and unreasonable cost, or where an item crucial to performance is destroyed. This defence does not apply if the promisor assumed the risk or if the circumstances causing the impossibility were a consequence of the party's own actions.
| Characteristics | Values |
|---|---|
| Definition | Impossibility is an excuse for the non-performance of duties under a contract, based on a change in circumstances that make it impossible to fulfil the contract. |
| Applicability | Applies where performance is impossible due to unforeseen circumstances, such as changes in law, death, illness, destruction or change of the object of the contract, or natural disasters. |
| Requirements | To claim impossibility, a party must show an unforeseen event occurred, the event made performance impossible, and the non-occurrence of the event was not foreseeable. |
| Defences | Impossibility can be used as a defence against breach of contract claims, but it does not apply if the party assumed the risk or if the event was reasonably foreseeable. |
| Impracticability | Related to impossibility, but separate. Impracticability refers to when performance is extremely difficult or expensive, rather than impossible. |
| Commercial Impracticability | A type of impracticability defence that applies to contracts involving the sale of commercial goods. |
| Force Majeure | A contractual term that excuses performance due to unforeseen events, but only if included in the contract. |
| Jurisdiction | Varies by jurisdiction, with some sources treating impossibility and impracticability as separate defences. |
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What You'll Learn
Impossibility vs Impracticability
In contract law, the doctrines of impossibility and impracticability serve as defences for the non-performance of contractual obligations. They are based on the occurrence of unforeseen events or circumstances that significantly alter the nature of performance.
Impossibility refers to situations where an unforeseen event makes it absolutely impossible to perform the contract. This event must be objective and not merely a subjective inconvenience for the party. For example, if a house that was supposed to be painted burns down before the painting is to take place, the contract is impossible to perform. The doctrine of impossibility can also apply when performance can only be done at an excessive and unreasonable cost, i.e. commercial impracticability.
Impracticability, on the other hand, refers to situations where unforeseen circumstances make fulfilling contractual obligations excessively burdensome, costly, or difficult, but not impossible. For example, during the COVID-19 pandemic, many parties to a contract claimed the benefit of the impossibility doctrine due to the nationwide lockdown, transportation issues, and shutdowns. The courts can grant the principle of impracticability in cases of damage to the subject matter, death or any physical disability, or changes in relevant laws.
To establish the doctrine of impossibility, courts require a high standard of proof, emphasising that mere difficulty or increased expense does not suffice. Similarly, impracticability requires an assessment of the extent to which the unforeseen circumstances have altered the nature of performance.
Both doctrines require that the circumstances were not contemplated at the time the contract was made and that neither party assumed the risk of such circumstances.
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Death or Incapacitation
The doctrine of impossibility or impossibility of performance is a concept in contract law that excuses the nonperformance of contractual duties due to a change in circumstances. This change in circumstances must be an underlying assumption of the contract, making performance impossible. For example, if a house burns down, the painter is excused from their duty to paint it, and the owner is excused from paying for the service. However, the painter may still sue for unjust enrichment for any benefit they conferred before the house burned down.
The concept of impossibility due to death or incapacitation is similar to impracticability, but they are distinct. Impracticability arises when performance becomes extremely difficult or unreasonably expensive due to unforeseen circumstances. While death or incapacitation can render performance impossible, it may not always meet the threshold of impracticability. The distinction between impossibility and impracticability is crucial, as it determines whether non-performance is excused.
In summary, the death or incapacitation of a party can lead to the doctrine of impossibility being invoked, excusing non-performance. However, it is important to distinguish between impossibility and impracticability, as the former completely prevents performance, while the latter only makes it extremely difficult or costly.
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Destruction of Object
The doctrine of impossibility or impossibility of performance is a concept in contract law that excuses the non-performance of duties under a contract due to a change in circumstances that makes the fulfilment of the contract impossible. This change in circumstances must be an unforeseen event that was not caused by the party seeking to excuse their performance.
Destruction of the object or subject matter of a contract is one such circumstance that can render the performance of a contract impossible. This is based on the legal maxim 'lex non cogit ad impossibilia', which means that the law does not compel what is impossible. In other words, if the subject matter of a contract is destroyed, it becomes impossible for the parties to fulfil their contractual obligations, and they are excused from performance.
For example, if a contract is made to rent an opera house for holding concerts, and the opera house is burned down in a fire before the contract is fulfilled, the contract is considered frustrated, and the performance is excused. Similarly, if a contract is made to purchase the annual wool output of a ranch, and the sheep die of an epidemic before they can be shorn, the destruction of the subject matter (the sheep) makes the performance of the contract impossible.
It is important to note that the destruction must be outside the control of the parties and must not be caused by the party seeking to excuse their performance. Additionally, the destruction must be done in the absence of knowledge of the seller, and it includes not only the complete destruction of goods but also situations where the goods have been stolen, lost, or have become commercially worthless.
In some jurisdictions, like the United States, the doctrine of frustration is not commonly used, and courts refer to the identical rule as the 'Doctrine of Impossibility of Performance' or 'Supervening Impossibility of Performance'.
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Change in Law
In contract law, impossibility is a defense for the non-performance of contractual duties due to a change in circumstances that makes the fulfillment of the contract impossible. This change in circumstances can be the discovery of pre-existing circumstances or unforeseen events that occur after the contract is formed.
A change in law or government policy can render a previously lawful contract impossible to perform. For example, if a business enters into a contract to supply coffee beans, but the consumption or use of coffee beans is later outlawed, the contract would become impossible to perform. This is known as legal impossibility.
In California, "impossibility" is a recognized defense to a breach of contract claim. There are two types of impossibility: legal and factual. While a change in law would constitute legal impossibility, factual impossibility would involve an unforeseen event or circumstance that prevents the performance of the contract. For instance, if a global coffee bean supply suddenly ceased to exist, this would be a case of factual impossibility.
It is important to note that the doctrine of impossibility does not apply when there is a suitable alternative or replacement available. For example, in the case of Paulozzi v. Parkview Custom Homes, LLC, the contract included an arbitration provision specifying the use of a particular arbitration center. However, when the homeowner attempted to file an arbitration claim, it was discovered that the specified center was no longer in business. The court absolved the homeowner of the obligation to arbitrate, focusing on the intent of the parties rather than impossibility. Nonetheless, the Ohio Court of Appeals reversed this decision, arguing that other arbitration centers were available or could be appointed, thus fulfilling the intent of the parties.
In the context of the COVID-19 pandemic, the Indian Government issued a memorandum clarifying that disruptions to supply chains due to the pandemic should be considered a natural calamity, invoking the Force Majeure clause. This clause, found in Section 56 of the Indian Contract Act, 1872, addresses situations where an event occurs that makes the performance of a contract impossible or unlawful.
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Commercial Impracticability
In the case of Raytheon Co. v. White, the court held that "a contract is commercially impracticable when performance would cause extreme and unreasonable difficulty, expense, injury, or loss to one of the parties." This means that a finding of impracticability can excuse a party from performing unless they have assumed the risk of the event. For example, in government contracting, impracticability has been treated as a constructive change to the contract, allowing the contractor to recover costs incurred in attempting to perform the commercially impracticable contract.
There are two recognized types of commercial impracticability: supervening impracticability and existing impracticability. Supervening impracticability occurs when an event takes place after a contract is made, which makes the performance of that contract impracticable without the fault of either party. This is based on the assumption that the non-occurrence of this event was a basic assumption upon which the contract was made. On the other hand, existing impracticability refers to a situation where, at the time of the contract, an existing fact made performance impracticable, and this fact was not known to or contemplated by the contractor.
To prove impracticability, the contractor must show more than just increased costs. They must explore and exhaust alternatives before concluding that the contract was legally impossible or commercially impracticable to perform. For instance, in Massachusetts Bay Transp. Auth. v. United States, the court held that a contractor must prove they were not at fault for the existence of the fact that made performance impracticable and that they had no reason to know of this fact.
In conclusion, commercial impracticability is an important concept in contract law that provides an excuse from completing contractual obligations in rare and specific circumstances. It is distinct from impossibility and requires a showing of extreme and unreasonable difficulty or expense that was not assumed by the performing party.
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Frequently asked questions
Impossibility in contract law is an excuse for non-performance of duties under a contract due to a change in circumstances that makes it impossible to fulfil those duties.
Examples of impossibility include the death or incapacitation of an individual crucial to the contract, the destruction of an item necessary for performance, or a change in law that makes the contract illegal.
Impracticability arises when performance under a contract becomes extremely difficult or costly, whereas impossibility means there is no way to fulfil the contract.
Frustration of purpose relates to the underlying purpose of a contract, rather than a party's inability to perform. It can excuse a party's performance when their principal purpose is substantially frustrated, they are not at fault, and the contract was made on the assumption that the frustration would not occur.
Force majeure is a contractual term that excuses parties from performing their obligations in certain circumstances, but only if it is included in the contract. Impossibility, on the other hand, can excuse non-performance even if force majeure is not specified in the contract.
