Should performance under a contract be excused because of commercial impracticability? Is there any significant difference between frustration of purpose andcommercial impracticability? Underwhat circumstances should these be limited?
Temporary Impossibility. An occurrence or event that makes performance temporarily impossible operates to suspend performance until the impossibility ceases. Once the tem- porary event ends, the parties ordinarily must perform the contract as originally planned. Example 14.31 Mindy and Lyn Carr contract to rent a sailboat from Key West Rentals for a month-long trip. The day before their trip is scheduled to begin, Hurricane Irma hits the coast where the boat is docked, causing damage. The hurricane makes performance tem- porarily impossible, and the Carrs postpone their trip. Once the repairs are made to the dock and the boat, however, Key West Rentals will be required to perform the contract as Know This originally planned. The Carrs have a right to rent the boat for a month for the previously The doctrine agreed-on price. Sometimes, however, the lapse of time and the change in circumstances surrounding such of commercial a contract make it substantially more burdensome for the parties to perform the promised impracticability does acts. In that situation, the contract may be discharged. I Classic Case Example 14.32 In 1942, not provide relief from actor Gene Autry was drafted into the U.S. Army. Being drafted rendered his contract with a such events as ordinary Hollywood movie company temporarily impossible to perform, and it was suspended until price increases or easily the end of World War II in 1945. When Autry got out of the army, the purchasing power of predictable changes in the dollar had declined so much that performance of the contract would have been substantially burdensome to him. Therefore, the contract was discharged.?' the weather. Commercial Impracticability Courts may also excuse parties from their performance Commercial Impracticability obligations when the performance becomes much more difficult or expensive than the A doctrine that may excuse the parties originally contemplated. In one classic case, for instance, a court held that a contract duty to perform a contract when could be discharged because a party would have to pay ten times more than the original performance becomes much more estimate to excavate a certain amount of gravel. 22 difficult or costly due to forces that For someone to invoke the doctrine of commercial impracticability successfully, however, neither party could control or foresee at the time the contract was formed. the anticipated performance must become extremely difficult or costly. Furthermore, the added burden of performing must not have been foreseeable by the parties when the contract was made. (See this chapter's Beyond Our Borders feature for a discussion of Germany's approach to impracticability and impossibility of performance.) 21. Autry v. Republic Productions, 30 Cal.2d 144, 180 P.2d 888 (1947). 22. Mineral Park Land Co. v. Howard, 172 Cal. 289, 156 P. 458 (1916). 23. Restatement (Second) of Contracts, Section 264.Frustration of Purpose Closely allied with the doctrine of commercial impracticability is the doctrine of frustration of purpose. In principle, a contract will be discharged if Frustration of Purpose A court- supervening circumstances make it impossible to attain the purpose both parties had in created doctrine under which a mind when making the contract. As with commercial impracticability, the supervening party to a contract will be relieved of event must not have been foreseeable at the time of the contracting. her or his duty to perform when the There are some differences between the doctrines, however. Commercial impracticability objective purpose for performance no longer exists due to reasons beyond usually involves an event that increases the cost or difficulty of performance. In contrast, that party's control. frustration of purpose typically involves an event that decreases the value of what a party receives under the contract. XX Practice and Review Val's Foods signs a contract to buy 1,500 pounds of basil from Sun Farms, a small organic herb grower, if an independent organization inspects the crop and certifies that it contains no pesticide or herbicide residue. Val's has a contract with several restaurant chains to supply pesto and intends to use Sun Farms' basil in the pesto to fulfill these contracts. When Sun Farms is preparing to harvest the basil, an unexpected hailstorm destroys half the crop. Sun Farms attempts to purchase additional basil from other farms, but it is late in the season, and the price is twice the normal market price. Sun Farms is too small to absorb this cost and immediately notifies Val's that it will not fulfill the contract. Using the information presented in the chapter, answer the following questions. 1. Suppose that Sun Farms supplies the basil that survived the storm but the basil does not pass the chemical-residue inspection. Which concept discussed in the chapter might allow Val's to refuse to perform the contract in this situation? 2. Under which legal theory or theories might Sun Farms claim that its obligation under the contract has been discharged by operation of law? Discuss fully. (Continues)
