When Can a Contract Be Discharged by Impossibility of Performance?

Entering a contract is a promise to perform a specific action, but what happens when something completely unexpected makes that action impossible? This is where the legal doctrine of impossibility of performance comes into play. It’s a crucial concept within contract law that can excuse a party from their obligations under specific, limited circumstances. This isn’t about simply wanting to get out of a deal; it’s about a fundamental change in circumstances that makes performance genuinely impossible.

The audience for this blog post is made up of individuals and small business owners who want to better understand their legal rights and obligations. The tone is professional, yet easy to understand.

What Is Impossibility of Performance?

Impossibility of performance is a legal defense to a breach of contract claim. It allows a party to be discharged from their contractual duties if an unforeseen event, not caused by their own actions, makes it objectively impossible to perform the agreed-upon obligations. The key word here is “impossible,” not just “impractical” or “more expensive.” This is a higher standard than mere difficulty.

For this doctrine to apply, the event must be both unforeseen and beyond the control of the parties. Examples often include:

• Destruction of Subject Matter: If the specific item or property essential to the contract is destroyed. For example, a contract to sell a unique vintage car is discharged if the car is destroyed in a fire.
• Death or Incapacity: If the contract requires a specific person to perform and that person dies or becomes incapacitated. A painter hired for a specific mural cannot perform if they pass away.
• New Law or Regulation: A new law is passed that makes the performance of the contract illegal. For instance, a new zoning law prohibits the construction project you were contracted to complete.

Distinguishing Impossibility from Impracticability

It’s crucial to understand the difference between impossibility and impracticability. While a situation might be very difficult or expensive, that doesn’t necessarily make it impossible. For example, if the cost of raw materials for a construction project skyrockets, it might be financially disastrous, but it’s not impossible to complete. The doctrine of impracticability requires an extreme and unreasonable difficulty, expense, or loss that was not anticipated by either party.

How Does a Court Determine Impossibility?

Courts will typically look at several factors when a party asserts impossibility of performance. They will analyze the nature of the event, whether it was foreseeable, and if the party’s own actions contributed to the impossibility. A court’s primary goal is to determine if the performance is objectively impossible, meaning no one could perform the obligation, rather than subjectively impossible, meaning just one party can’t.

Summary of Key Points

1. High Legal Standard: Impossibility of performance is a difficult standard to meet. It requires that an unforeseen event makes contract performance truly impossible, not just difficult or more expensive.
2. Unforeseen Events: The event must be something neither party could reasonably have anticipated at the time of the contract’s creation.
3. Objective vs. Subjective: The impossibility must be objective, meaning no one could perform the task, not just that you personally cannot.

Frequently Asked Questions (FAQ)

Q1: Does a change in market conditions qualify as impossibility?

A: Generally, no. Changes in market conditions that make performance more expensive or less profitable are usually considered a business risk assumed by the parties. They do not meet the high standard of impossibility.

Q2: What is the difference between impossibility and frustration of purpose?

A: Impossibility means the performance itself cannot be done. Frustration of purpose means the performance is still possible, but the reason for entering the contract no longer exists due to an unforeseen event, rendering the contract pointless.

Q3: Can I be sued for breach of contract if I claim impossibility?

A: Yes, you can be sued. Asserting impossibility is a defense you would use in court. The burden of proof would be on you to convince the court that the circumstances meet the legal standard for impossibility of performance.

Q4: What if I was negligent and that caused the impossibility?

A: The doctrine does not apply if the impossibility was caused by the fault or negligence of the party seeking to be excused. The event must be truly beyond your control.

Disclaimer: This blog post is for informational purposes only and does not constitute legal advice. The information provided is generated by an AI and should not be relied upon as a substitute for professional legal consultation. You should consult with a qualified legal expert for advice tailored to your specific situation.

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