impossibility of performance of contract

A doctrine under which a party to a contract is relieved of his or her duty to perform when performance has become impossible or totally impracticable (through no fault of the party). As a defense to nonperformance, such arises when performance is not possible because of, for example, destruction of subject of contract or death of person necessary for performance or where act contracted for has become illegal.

The doctrine of "impossibility of performance" is an exception to the general rule that the promisor must either perform, or pay damages for his failure to perform, no matter how burdensome his performance has become because of unforeseen circumstances. While the doctrine has evolved around various specific categories, one basic part of the doctrine is that the impossibility of performance must be objective rather than merely subjective. It is now recognized that a thing is impossible in legal contemplation when it is not practicable; and a thing is impracticable when it can only be done at an excessive and unreasonable cost. Transatlantic Fin. Corp. v. United States, 363 F.2d 312, 315.

When the issue is raised, the court is asked to construct a condition of performance based on changed circumstances, a process which involves at least three reasonably definable steps. First, a contingency-something unexpected-must have occurred. Second, the risk of the unexpected occurrence must not have been allocated either by agreement or by custom. Finally, occurrence of the contingency must have rendered performance commercially impracticable. Although impossibility or impracticability of performance may arise in many different ways, the tendency has been to classify the cases into several categories.

These are:

1) Destruction, deterioration or unavailability of the subject matter or the tangible means of performance;

2) Failure of the contemplated mode of delivery or payment;

3) Supervening prohibition or prevention by law;

4) Failure of the intangible means of performance and

5) Death or illness. The basic U.C.C. sections dealing with impossibility of performance are No.No. 2-613, 2-615, 2-616.

See in this regard, commercial frustration; commercial impracticability; frustration of contract; impracticability