Also known as: impracticability
Written by attorneys · grounded in primary & secondary sources — see below
A doctrine discharging a party's contractual duty at formation when performance is impracticable because of a fact unknown to that party and whose nonexistence formed a basic assumption of the bargain. The rule applies only when the party is without fault and the contract language does not indicate a contrary allocation of risk. It prevents enforcement of duties that were objectively impossible from the outset.
Evergreen Bank contracted with Eastern Electric to excavate a site for a new branch assuming standard soil conditions. At signing neither party knew the site contained unstable fill that made excavation impossible without complete redesign. Eastern Electric refused to proceed. The bank sued for breach. Because the unstable fill existed at formation and was unknown to Eastern Electric, its duty never arose.
Emerald Enterprises agreed to build a warehouse next to Elijah Edwards's land. Unknown to both parties at formation, a permanent easement already blocked any structure on the chosen parcel. When Edwards sought an injunction, Emerald Enterprises defended by showing the barrier made performance impossible from the start. The preexisting easement excused the duty.
Everlasting Insurance promised Elliot Edmonds immediate coverage on a vessel that had already sunk before the policy issued. Neither party knew of the sinking at formation. When Edmonds claimed benefits, the insurer refused. Because the loss existed at the moment of contracting, the duty to insure never arose and was merely suspended until the facts were known.
Select any source to read its text and confirm it supports the definition.
Elena Estrada repudiated a supply contract with Elise Everly claiming she could not obtain rare parts. After the repudiation, evidence showed the parts had been unavailable worldwide at the time of formation. Everly sued for damages. Because the impossibility predated formation, Estrada's duty to pay damages was discharged.
Edith Eberhardt contracted with Emerald Enterprises to supply materials to a project benefiting Ella Emerson as third-party beneficiary. Unknown to all at formation, a regulatory ban already prohibited the materials. When Emerson sued, the court held her rights were discharged because the underlying duty never arose.
Alcoa contracted to supply aluminum to Essex Group using a pricing formula tied to an index that already failed to reflect actual costs at formation. Both parties were unaware of the index flaw. When costs skyrocketed, Alcoa sought relief. The preexisting mismatch between the formula and reality excused performance from the outset.
Existing impracticability concerns facts that made performance impossible at the moment of formation and unknown to the performing party. Supervening impracticability arises from events occurring after formation. The former prevents a duty from arising under Restatement § 266 while the latter discharges an existing duty under § 261.
Yes. The doctrine requires that the impracticability exist without the party's fault and that the party had no reason to know of the disqualifying fact at formation.
No. The rule applies only to discharge a duty to render performance and does not affect claims for breach that have already arisen before the facts are discovered.
…however, a willingness by Transatlantic to assume abnormal risks, and this fact should legitimately cause us to judge the impracticability of performance by an alternative route in stricter terms than we would were the contingency unforeseen. We turn then to the question whether occurrence of the contingency rendered…