Also known as:supervening events · supervening frustration
Written by attorneys · grounded in primary & secondary sources — see below
An occurrence after contract formation that renders a party's performance impracticable without that party's fault. The non-occurrence of the event must have been a basic assumption on which both parties made the contract.
Sources & Authorities
How it applies
Common Examples
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Regulatory Ban on Contracted Design
Imperial Cars contracted with Green Fleet to supply 10,000 custom exhaust systems at a fixed price. Shortly after performance began, Congress enacted a nationwide statute prohibiting the exact configuration required by the contract. Imperial Cars had already purchased non-returnable materials and completed custom engineering. The statutory prohibition discharged Imperial Cars' duty because the continued legality of the design was a basic assumption of the agreement.
Destruction of Named Performance Venue
Delta Productions contracted with Jim to headline a festival at the Oak Ridge Amphitheater, a venue Jim specifically required during negotiations. A landslide destroyed the amphitheater two weeks before the event, and officials permanently closed the site. Delta explored substitute venues but found them unavailable or far more expensive. The destruction discharged Delta's duty because the continued existence of the named amphitheater was a basic assumption on which both parties contracted.
Select any source to read its text and confirm it supports the definition.
Cases
Restatements
Course Outlines
Study Supplements
Unforeseen Cost Deviation in Supply Contract
Aluminum Company of America contracted with Essex Group to supply aluminum at a price tied to a production-cost index. After formation, an extreme and unanticipated deviation in the index and non-labor costs made performance commercially impracticable. ALCOA had neither assumed nor borne the risk of deviation beyond foreseeable limits. The supervening cost deviation discharged the duty because its non-occurrence was a basic assumption of the fixed-price arrangement.
Aluminum Company of America v. Essex Group, Inc.499 F. Supp. 53 (W.D. Pa. 1980)
Common questions
Frequently Asked
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When does a supervening event discharge a contractual duty under the Restatement?+
A party's duty is discharged when performance becomes impracticable without fault by an event whose non-occurrence was a basic assumption on which the contract was made. The rule applies broadly beyond traditional categories such as death of a necessary person or destruction of specific property. The principle yields to contrary agreements that allocate greater risk to a party.
Supporting sources
What constitutes a basic assumption for purposes of supervening impracticability?+
The non-occurrence of the event must have been a basic assumption on which both parties made the contract. This criterion is readily satisfied when performance depends on the continued existence of a specific person or thing. Market shifts and ordinary cost fluctuations are typically risks the parties assume and do not satisfy the requirement.
Supporting sources
Does a supervening event excuse performance when the contract contains no force-majeure clause?+
Absence of a force-majeure clause does not prevent discharge. The Restatement principle applies unless the language or circumstances indicate the parties intended a contrary allocation of risk. Silence on regulatory changes or site loss supports rather than contradicts the basic assumption that the event would not occur.
Supporting sources
Can increased cost alone trigger discharge by a supervening event?+
Increased cost alone does not render performance impracticable when the essential purpose remains achievable. The doctrine requires that the event make performance commercially senseless or objectively impossible in light of the basic assumption, not merely more expensive.
Supporting sources
499 F. Supp. 53 (W.D. Pa. 1980)Contracts
…that performance is discharged, unless the language or the circumstances indicate the contrary. [^maj-12]: § 285. DISCHARGE BY SUPERVENING FRUSTRATION. Where, after a contract is made, a party’s principle purpose is substantially frustrated without his fault by the occurrence of an event the non-occurrence of which was a basic…