Also known as: U.C.C. § 2-615 · Uniform Commercial Code § 2-615 · UCC 2-615 · commercial impracticability · excuse by failure of presupposed conditions
Written by attorneys · grounded in primary & secondary sources — see below
A statutory rule excusing a seller from delay or nondelivery of goods when performance has been made impracticable by the occurrence of a contingency the nonoccurrence of which was a basic assumption of the contract. The seller must have taken all reasonable steps to assure performance and must notify the buyer seasonably of any allocation or nondelivery.
Prairie Seeds contracted to deliver five thousand bags of hybrid corn seed to Valley Acres. An unexpected regional blight destroyed half the seed crop. Prairie Seeds allocated the remaining seed fairly among buyers and notified Valley Acres of the reduced quota. Valley Acres sued for the shortfall.
Northline Gas agreed to supply Orion Manufacturing fixed monthly quantities of natural gas. A sudden government emergency order capped pipeline output by forty percent. Northline proportionally reduced deliveries to all customers and gave prompt notice to Orion. Orion sued for the shortfall during the cap period.
Select any source to read its text and confirm it supports the definition.
Gulf Oil contracted to supply jet fuel to Eastern Air Lines at a fixed price. World events caused a sharp rise in crude oil costs. Gulf sought to raise prices or limit deliveries and notified Eastern of its position. Eastern sued to enforce the original terms.
Transatlantic Financing agreed to carry wheat from the United States to India. The Suez Canal closed after the contract was signed. The carrier completed the voyage via the Cape of Good Hope at substantially higher cost and sought extra payment. The United States refused to pay the surcharge.
Alcoa contracted to supply aluminum to Essex Group under a long-term pricing formula. The cost of electricity used to produce the aluminum rose dramatically. Alcoa sought to adjust the price or be excused from further deliveries. Essex insisted on performance at the original formula price.
The seller must show that an unforeseen contingency made performance impracticable, that the nonoccurrence of the contingency was a basic assumption of the contract, that the seller did not assume a greater obligation, and that the seller gave seasonable notice and allocated fairly when only part of capacity was affected.
No. Ordinary market shifts or cost increases are risks parties normally assume. Only an extraordinary contingency that transforms the nature of performance, not merely its expense, satisfies the basic-assumption requirement.
The seller must notify buyers seasonably of any delay, nondelivery, or reduced quota. Failure to give timely notice can prevent the seller from relying on the excuse even when the underlying contingency qualifies.
Yes, when the order is unforeseen, its nonoccurrence was a basic assumption, and the seller acts in good faith by complying and notifying buyers. The statute expressly recognizes good-faith compliance with governmental regulation as a ground for excuse.
…No doubt the tension affected freight rates, and it is arguable that the risk of closure became part of the dickered terms. Uniform Commercial Code § 2-615, comment 8. We do not deem the risk of closure so allocated, however. Foreseeability or even recognition of a risk does not necessarily prove its allocation.[^maj-11] Compare Uniform…