Restat 2d of Contracts, § 261

• Restatement of the Law, Second, Contracts
• Chapter 11- Impracticability of Performance and Frustration of Purpose
• § 261 Discharge by Supervening Impracticability

Where, after a contract is made, a party's performance is made impracticable without his fault by the occurrence of an event the non-occurrence of which was a basic assumption on which the contract was made, his duty to render that performance is discharged, unless the language or the circumstances indicate the contrary.

Comment:

a.  Scope.  Even though a party, in assuming a duty, has not qualified the language of his undertaking, a court may relieve him of that duty if performance has unexpectedly become impracticable as a result of a supervening event (see Introductory Note to this Chapter). This Section states the general principle under which a party's duty may be so discharged. The following three sections deal with the three categories of cases where this general principle has traditionally been applied: supervening death or incapacity of a person necessary for performance (§ 262), supervening destruction of a specific thing necessary for performance (§ 263), and supervening prohibition or prevention by law (§ 264). But, like Uniform Commercial Code § 2-615(a), this Section states a principle broadly applicable to all types of impracticability and it "deliberately refrains from any effort at an exhaustive expression of contingencies" (Comment 2 to Uniform Commercial Code § 2-615). The principle, like others in this Chapter, yields to a contrary agreement by which a party may assume a greater as well as a lesser obligation. By such an agreement, for example, a party may undertake to achieve a result irrespective of supervening events that may render its achievement impossible, and if he does so his non-performance is a breach even if it is caused by such an event. See Comment c.  The rule stated in this Section applies only to discharge a duty to render a performance and does not affect a claim for breach that has already arisen. The effect of events subsequent to a breach on the amount of damages recoverable is governed by the rules on remedies stated in Chapter 16. See Comment e to § 347. Their effect on a claim for breach by anticipatory repudiation is governed by the rules on discharge stated in Chapter 12. Cases of existing, as opposed to supervening, impracticability are governed by § 266 rather than this Section.

b.  Basic assumption.  In order for a supervening event to discharge a duty under this Section, the non-occurrence of that event must have been a "basic assumption" on which both parties made the contract (see Introductory Note to this Chapter). This is the criterion used by Uniform Commercial Code § 2-615(a). Its application is simple enough in the cases of the death of a person or destruction of a specific thing necessary for performance. The continued existence of the person or thing (the non-occurrence of the death of destruction) is ordinarily a basic assumption on which the contract was made, so that death or destruction effects a discharge. Its application is also simple enough in the cases of market shifts or the financial inability of one of the parties. The continuation of existing market conditions and of the financial situation of the parties are ordinarily not such assumptions, so that mere market shifts or financial inability do not usually effect discharge under the rule stated in this Section. In borderline cases this criterion is sufficiently flexible to take account of factors that bear on a just allocation of risk. The fact that the event was foreseeable, or even foreseen, does not necessarily compel a conclusion that its non-occurrence was not a basic assumption. See Comment c to this Section and Comment a to § 265.

Illustrations:

1. On June 1, A agrees to sell and B to buy goods to be delivered in October at a designated port. The port is subsequently closed by quarantine regulations during the entire month of October, no commercially reasonable substitute performance is available (see Uniform Commercial Code § 2-614(1)), and A fails to deliver the goods. A's duty to deliver the goods is discharged, and A is not liable to B for breach of contract.

2. A contracts to produce a movie for B. As B knows, A's only source of funds is a $ 100,000 deposit in C bank. C bank fails, and A does not produce the movie. A's duty to produce the movie is not discharged, and A is liable to B for breach of contract.

3. A and B make a contract under which B is to work for A for two years at a salary of $ 50,000 a year. At the end of one year, A discontinues his business because governmental regulations have made it unprofitable and fires B. A's duty to employ B is not discharged, and A is liable to B for breach of contract.

4. A contracts to sell and B to buy a specific machine owned by A to be delivered on July 30. On July 29, as a result of a creditor's suit against A, a receiver is appointed and takes charge of all of A's assets, and A does not deliver the goods on July 30. A's duty to deliver the goods is not discharged, and A is liable to B for breach of contract.

c.  Contrary indication.  A party may, by appropriate language, agree to perform in spite of impracticability that would otherwise justify his non-performance under the rule stated in this Section. He can then be held liable for damages although he cannot perform. Even absent an express agreement, a court may decide, after considering all the circumstances, that a party impliedly assumed such a greater obligation. In this respect the rule stated in this Section parallels that of Uniform Commercial Code § 2-615, which applies "Except so far as a seller may have assumed a greater obligation . . . ." Circumstances relevant in deciding whether a party has assumed a greater obligation include his ability to have inserted a provision in the contract expressly shifting the risk of impracticability to the other party. This will depend on the extent to which the agreement was standardized (cf. § 211), the degree to which the other party supplied the terms (cf. § 206), and, in the case of a particular trade or other group, the frequency with which language so allocating the risk is used in that trade or group (cf. § 219). The fact that a supplier has not taken advantage of his opportunity expressly to shift therisk of a shortage in his supply by means of contract language may be regarded as more significant where he is middleman, with a variety of sources of supply and an opportunity to spread the risk among many customers on many transactions by slight adjustment of his prices, than where he is a producer with a limited source of supply, few outlets, and no comparable opportunity. A commercial practice under which a party might be expected to insure or otherwise secure himself against a risk also militates against shifting it to the other party. If the supervening event was not reasonably foreseeable when the contract was made, the party claiming discharge can hardly be expected to have provided against its occurrence. However, if it was reasonably foreseeable, or even foreseen, the opposite conclusion does not necessarily follow. Factors such as the practical difficulty of reaching agreement on the myriad of conceivable terms of a complex agreement may excuse a failure to deal with improbable contingencies. See Comment b to this Section and Comment a to § 265.

Illustration:

5. A, who has had many years of experience in the field of salvage, contracts to raise and float B's boat, which has run aground. The contract, prepared by A, contains no clause limiting A's duty in the case of unfavorable weather, unforeseen circumstances, or otherwise. The boat then slips into deep water and fills with mud, making it impracticable for A to raise it. If the court concludes, on the basis of such circumstances as A's experience and the absence of any limitation in the contract that A prepared, that A assumed an absolute duty, it will decide that A's duty to raise and float the boat is not discharged and that A is liable to B for breach of contract.

d.  Impracticability.  Events that come within the rule stated in this Section are generally due either to "acts of God" or to acts of third parties. If the event that prevents the obligor's performance is caused by the obligee, it will ordinarily amount to a breach by the latter and the situation will be governed by the rules stated in Chapter 10, without regard to this Section. See Illustrations 4-7 to § 237. If the event is due to the fault of the obligor himself, this Section does not apply. As used here "fault" may include not only "willful" wrongs, but such other types of conduct as that amounting to breach of contract or to negligence. See Comment 1 to Uniform Commercial Code § 2-613. Although the rule stated in this Section is sometimes phrased in terms of "impossibility," it has long been recognized that it may operate to discharge a party's duty even though the event has not made performance absolutely impossible. This Section, therefore, uses "impracticable," the term employed by Uniform Commercial Code § 2-615(a), to describe the required extent of the impediment to performance. Performance may be impracticable because extreme and unreasonable difficulty, expense, injury, or loss to one of the parties will be involved. A severe shortage of raw materials or of supplies due to war, embargo, local crop failure, unforeseen shutdown of major sources of supply, or the like, which either causes a marked increase in cost or prevents performance altogether may bring the case within the rule stated in this Section. Performance may also be impracticable because it will involve a risk of injury to person or to property, of one of the parties or of others, that is disproportionate to the ends to be attained by performance. However, "impracticability" means morethan "impracticality." A mere change in the degree of difficulty or expense due to such causes as increased wages, prices of raw materials, or costs of construction, unless well beyond the normal range, does not amount to impracticability since it is this sort of risk that a fixed-price contract is intended to cover. Furthermore, a party is expected to use reasonable efforts to surmount obstacles to performance (see § 205), and a performance is impracticable only if it is so in spite of such efforts.

Illustrations:

6. A contracts to repair B's grain elevator. While A is engaged in making repairs, a fire destroys the elevator without A's fault, and A does not finish the repairs. A's duty to repair the elevator is discharged, and A is not liable to B for breach of contract. See Illustration 3 to § 263.

7. A contracts with B to carry B's goods on his ship to a designated foreign port. A civil war then unexpectedly breaks out in that country and the rebels announce that they will try to sink all vessels bound for that port. A refuses to perform. Although A did not contract to sail on the vessel, the risk of injury to others is sufficient to make A's performance impracticable. A's duty to carry the goods to the designated port is discharged, and A is not liable to B for breach of contract. Compare Illustration 5 to § 262.

8. The facts being otherwise as stated in Illustration 7, the rebels announce merely that they will confiscate all vessels found in the designated port. The goods can be bought and sold on markets throughout the world. A refuses to perform. Although there is no risk of injury to persons, the court may conclude that the risk of injury to property is disproportionate to the ends to be attained. A's duty to carry the goods to the designated port is then discharged, and A is not liable to B for breach of contract. If, however, B is a health organization and the goods are scarce medical supplies vital to the health of the population of the designated port, the court may conclude that the risk is not disproportionate to the ends to be attained and may reach a contrary decision.

9. Several months after the nationalization of the Suez Canal, during the international crisis resulting from its seizure, A contracts to carry a cargo of B's wheat on A's ship from Galveston, Texas to Bandar Shapur, Iran for a flat rate. The contract does not specify the route, but the voyage would normally be through the Straits of Gibraltar and the Suez Canal, a distance of 10,000 miles. A month later, and several days after the ship has left Galveston, the Suez Canal is closed by an outbreak of hostilities, so that the only route to Bandar Shapur is the longer 13,000 mile voyage around the Cape of Good Hope. A refuses to complete the voyage unless B pays additional compensation. A's duty to carry B's cargo is not discharged, and A is liable to B for breach of contract.

10. The facts being otherwise as in Illustration 9, the Suez Canal is closed while A's ship is in the Canal, preventing the completion of the voyage. A's duty to carry B's cargo is discharged, and A is not liable to B for breach of contract.

11. A contracts to construct and lease to B a gasoline service station. A valid zoning ordinance is subsequently enacted forbidding the construction of such a station but permitting variances in appropriate cases. A, in breach of his duty of good faith and fair dealing (§ 205), makes no effort to obtain a variance, although variances have been granted in similar cases, and fails to construct the station. A's performance has not been made impracticable. A's duty to construct is not discharged, and A is liable to B for breach of contract.

e.  "Subjective" and "objective" impracticability.  It is sometimes said that the rule stated in this Section applies only when the performance itself is made impracticable, without regard to the particular party who is to perform. The difference has been described as that between "the thing cannot be done" and "I cannot do it," and the former has been characterized as "objective" and the latter as "subjective." This Section recognizes that if the performance remains practicable and it is merely beyond the party's capacity to render it, he is ordinarily not discharged, but it does not use the terms "objective" and "subjective" to express this. Instead, the rationale is that a party generally assumes the risk of his own inability to perform his duty. Even if a party contracts to render a performance that depends on some act by a third party, he is not ordinarily discharged because of a failure by that party because this is also a risk that is commonly understood to be on the obligor. See Comment c.  But see Comment a to § 262.

Illustrations:

12. A, a milkman, and B, a dairy farmer, make a contract under which B is to sell and A to buy all of A's requirements of milk, but not less than 200 quarts a day, for one year. B may deliver milk from any source but expects to deliver milk from his own herd. B's herd is destroyed because of hoof and mouth disease and he fails to deliver any milk. B's duty to deliver milk is not discharged, and B is liable to A for breach of contract. See Illustration 1 to § 263; compare Illustration 7 to § 263.

13. A contracts to sell and B to buy on credit 1,500,000 gallons of molasses "of the usual run from the C sugar refinery." C delivers molasses to others but fails to deliver any to A, and A fails to deliver any to B. A's duty to deliver molasses is not discharged, and A is liable to B for breach of contract. If A has a contract with C, C may be liable to A for breach of contract.

14. A, a general contractor, is bidding on a construction contract with B which gives B the right to disapprove the choice of subcontractors. A makes a contract with C, a subcontractor, under which, if B awards A the contract, A will obtain B's approval of C and C will do the excavation for A. A is awarded the contract by B, but B disapproves A's choice of C, and A has the excavation work done by another subcontractor. A's duty to have C do the excavation is not discharged, and A is liable to C for breach of contract.

f.  Alternative performances.  A contract may permit a party to choose to perform in one of several different ways, any of which will discharge his duty. Where the duty is to render such an alternative performance, the fact that one or more of the alternatives has become impracticable will not discharge the party's duty to perform if at least one of them remains practicable. The form of the promise is not controlling, however, and not every promise that is expressed in alternative form gives rise to a duty to render an alternative performance. For example, a surety's undertaking that either the principal will perform or the surety will compensate the creditor does not ordinarily impose such a duty. See Restatement of Security § 117. Nor does a promise either to render a performance or pay liquidated damages impose such a duty. Furthermore, a duty that is originally one to render alternative performances ceases tobe such a duty if all but one means of performance have been foreclosed, as by the lapse of time or the occurrence of a condition including election by the obligor, or on the grounds of public policy (Chapter 8) or unconscionability (§ 208).

Illustrations:

15. On June 1, A contracts to sell and B to buy whichever of three specified machines A chooses to deliver on October 1. Two of the machines are destroyed by fire on July 1, and A fails to deliver the third on October 1. A's duty to deliver a machine is not discharged, and A is liable to B for breach of contract. If all three machines had been destroyed, A's duty to deliver a machine would have been discharged, and A would not have been liable to B for breach of contract. See Uniform Commercial Code § 2-613.

16. A contracts to repair B's building. The contract contains a valid provision requiring A to pay liquidated damages if he fails to make any of the repairs. S is surety for A's performance. Before A is able to begin, B's building is destroyed by fire. Neither A's nor S's duty is one to render an alternative performance. A's duty to repair the building is discharged, and A is not liable to B for liquidated damages or otherwise for breach of contract. S's duty as surety for A is also discharged, and S is not liable to B for breach of contract.

This Section is based on former § 457, combined with former §§ 454, 455, 461, 467, 469 and 325(2). See 6 Corbin, Contracts ch. 74 (1962 & Supp. 1980); 18 Williston, Contracts §§ 1931-37, 1959-61 (3d ed. 1978).

Comment a.  See Comments 1, 2 and 8 to Uniform Commercial Code § 2-615, Patterson, The Apportionment of Business Risks Through Legal Devices, 24 Colum L. Rev. 335, 350-52 (1924).

Comment b.  See Comments 4 and 5 to Uniform Commercial Code § 2-615. See also Martin v. Vector Co., 498 F.2d 16 (1st Cir. 1974), which cites the Tentative Draft of this Comment. For cases denying discharge where a party was aware of the risk and failed in an attempt to insert a clause shifting it to the other party, see Glidden Co. v. Hellenic Lines Ltd., 275 F.2d 253 (2d Cir. 1960); Freeto v. State Highway Comm'n, 161 Kan. 7, 166 P.2d 728 (1946). On foreseeability, compare L.N. Jackson & Co. v. Royal Norwegian Gov't, 177 F.2d 694 (2d Cir. 1949), cert. denied, 339 U.S. 914 (1950), with Baetjer v. New England Alcohol Co., 319 Mass. 592, 66 N.E.2d 798 (1946). Illustration 1 is based on Illustration 1 to former § 461. Compare Alabama Football, Inc. v. Wright, 452 F. Supp. 182 (N.D. Tex. 1977) (bankruptcy of World Football League); Mishara Constr. Co. v. Transit-Mixed Concrete Corp., 365 Mass. 122, 310 N.E.2d 363 (1974) (labor disputes); Foster Wheeler Corp. v. United States, 206 Ct. Cl. 533, 513 F.2d 588 (1975) (unfeasibility of government specification). Illustration 2 is suggested in part by Illustration 1 to former § 455; cf. Slaughter v. C.I.T. Corp., 229 Ala. 411, 157 So. 463 (1934); Christy v. Pilkinton, 224 Ark. 407, 273 S.W.2d 533 (1954); Watters v. Thompson, 354 Mass. 642, 241 N.E.2d 837 (1968). Illustration 3 is based on Martin v. Star Publishing Co., 50 Del. 181, 126 A.2d 238 (1956); see 407 East 61st Garage, Inc. v. Savoy Fifth Avenue Corp., 23 N.Y.2d 275, 296 N.Y.S.2d 338, 244 N.E.2d 37, (1968); Martin v. Vector Co., supra. Illustration 4 is based on Western Drug Supply & Specialty Co. v. Board of Administration, 106 Kan. 256, 187 P. 701 (1920); see City of Montpelier v. National Sur. Co., 97 Vt. 111, 122 A. 484 (1923); Lowenschuss v. Kane, 520 F.2d 255 (2d Cir. 1975).

For examples of the many cases and articles dealing with price increases for natural resources, particularly oil, see Eastern Air Lines v. Gulf Oil Corp., 415 F. Supp. 429 (S.D. Fla. 1975); Publicker Indus. v. Union Carbide Corp., 17 UCC Rep. Serv. 989 (E.D. Pa. 1975); Duesenberg, Contract Impracticability: Courts Begin to Shape § 2-615, 32 Bus. Law. 1089 (1977); Joskow, Commercial Impossibility, the Uranium Market and the Westinghouse Case, 6 J. Legal Studies 119 (1977); Comment d, infra.

Comment c.  That a party may, by express agreement, assume a greater obligation, see Martin v. Vector Co., 498 F.2d 16 (1st Cir. 1974); Rose v. Freeway Aviation, Inc., 120 Ariz. 298, 585 P.2d 907 (Ct. App. 1978); for an example of an inference, from a contract term, that a party had agreed to bear the risk of a substantial and unforeseen rise in the cost of a raw material, see Publicker Indus. v. Union Carbide Corp., 17 UCC Rep. Serv. 989 (E.D. Pa. 1975); compare Foster Wheeler Corp. v. United States, 206 Ct. Cl. 533, 513 F.2d 588 (1975). Courts may refuse to excuse a party who failed to insert a term qualifying or limiting his liability for an event that the court may or may not describe as "foreseeable." See, e.g., Lowenschuss v. Kane, 520 F.2d 255 (2d Cir. 1975), on remand, 72 F.R.D. 498 (S.D.N.Y. 1976); United States v. General Douglas MacArthur Senior Village, 508 F.2d 377 (2d Cir. 1974); Liner v. Armstrong Homes, 19 Wash. App. 921, 579 P.2d 367 (1978); Calvin V. Koltermann, Inc. v. Underream Piling Co., 563 S.W.2d 950 (Tex. Civ. App. 1977), ref. n.r.e. As to limitations on contractual excuse greater than that in UCC § 2-615, see Eastern Air Lines v. McDonnell Douglas Corp., 532 F.2d 957 (5th Cir. 1976), and authorities cited therein.

On foreseeability, see, e.g., Calvin V. Koltermann, Inc. v. Underream Piling Co., supra; Mishara Constr. Co. v. Transit-Mixed Concrete Corp., 365 Mass. 122, 310 N.E.2d 363 (1964); Eastern Air Lines v. Gulf Oil Corp., 415 F. Supp. 429 (S.D. Fla. 1975); Kansas City, Missouri v. Kansas City, Kansas, 393 F. Supp. 1 (W.D. Mo. 1975). The dangers of the mechanistic use of a foreseeability test have been noted on several occasions. See, e.g., Eastern Air Lines v. McDonnell Douglas Corp., supra, at 992 n.97 (confusion with tort standard); Posner & Rosenfield, Impossibility and Related Doctrines in Contract Law: An Economic Analysis, 6 J. Legal Studies 83, 98-100 (1977) (does not answer the question who is superior bearer of foreseeable risk); Note, The Doctrine of Impossibility of Performance and the Foreseeability Test, 6 Loy. U.L. Rev. 575 (1975) (even if event is foreseeable, extent of risk assumed may not be). The last-cited Note contains a good collection of authorities to 1975. Illustration 5 is based on Wills v. Shockley, 52 Del. 295, 157 A.2d 252 (Super. Ct. 1960); see Illustration 3 to former § 457; Joskow, Commercial Impossibility, the Uranium Market and the Westinghouse Case, 6 J. Legal Studies 119, 163-76 (1977).

Comment d.  See former §§ 454 and 467 and Comments 3 and 4 to Uniform Commercial Code § 2-615. That the obligor's fault, whether or not "willful," may not be used by him as the basis of an impracticability excuse, see Bloor v. Falstaff Brewing Corp., 454 F. Supp. 258, 267-68 (S.D.N.Y. 1978), aff'd, 601 F.2d 609 (2d Cir. 1979); Liner v. Armstrong Homes, 19 Wash. App. 921, 579 P.2d 367 (1978); Nodland v. Chirpich, 307 Minn. 360, 240 N.W.2d 513 (1976); Lowenschuss v. Kane, 520 F.2d 255 (2d Cir. 1975), on remand, 72 F.R.D. 498 (S.D.N.Y. 1976); Chemetron Corp. v. McLouth Steel Corp., 381 F. Supp. 245 (N.D. Ill. 1974), aff'd, 522 F.2d 469 (7th Cir. 1975). Cf. Calvin V. Koltermann, Inc. v. Underream Piling Co., 563 S.W.2d 950 (Tex. Civ. App. 1977), ref. n.r.e. The events relied on by the obligor may in fact be violations of his own duty of good faith and fair dealing (§ 205), especially his duty not to interfere with the obligee's performance (Comment e to § 205). Examples of the interplay are found in Bloor v. Falstaff Brewing Corp., supra, and Nodland v. Chirpich, supra. For discussion of "fault" in contexts similar to those of this Section, see Comment 1 to Uniform Commercial Code § 2-613 and Comment c to Restatement of Restitution § 142. See also Uniform Commercial Code § 2-614(1).

That "impracticability" extends beyond absolute impossibility, see Natus Corp. v. United States, 178 Ct. Cl. 1, 371 F.2d 450 (1967); Northern Corp. v. Chugach Elec. Ass'n, 518 P.2d 76 (Alaska), modified on rehearing, 523 P.2d 1243 (Alaska 1974); id. on appeal from trial on remand, 562 P.2d 1053 (Alaska 1977); Mineral Park Land Co. v. Howard, 172 Cal. 289, 156 P. 458 (1916). Compare Kansas City, Missouri v. Kansas City, Kansas, 393 F. Supp. 1 (W.D. Mo. 1975), with Kansas City Terminal Ry. v. Atchison, T. & S.F. Ry., 512 S.W.2d 415 (Mo. Ct. App. 1974). That mere increase in difficulty is not enough, see Jennie-O Foods v. United States, 580 F.2d 400 (Ct. Cl. 1978); Huffman Towing, Inc. v. Mainstream Shipyard, 388 F. Supp. 1362 (N.D. Miss. 1975). For a contention that the courts have been too "wooden" in their application of the concept of impracticability, see Comment, Contractual Flexibility in a Volatile Economy: Saving U.C.C. Section 2-615 from the Common Law, 72 Nw. U. L. Rev. 1032 (1978).

The pandemic inflation of the 1970's and particularly the radical price increases in oil, uranium and other natural resources have led to several judicial opinions and many commentaries on when price rises should excuse a middleman in a long term fixed price supply contract. See, e.g., Eastern Air Lines v. Gulf Oil Corp., 415 F. Supp. 429 (S.D. Fla. 1975); Publicker Indus. v. Union Carbide Corp., 17 UCC Rep. Serv. 989 (E.D. Pa. 1975); Virginia Elec. and Power Co. v. Westinghouse Elec. Corp., 887 ATRR A-15 (E.D. Va. 1978); Comment, Contractual Flexibility in a Volatile Economy: Saving U.C.C. Section 2-615 from the Common Law, supra; Duesenberg, Contract Impracticability: Courts Begin to Shape § 2-615, 32 Bus. Law 1089 (1977); Hurst, Freedom of Contract in an Unstable Economy: Judicial Reallocation of Contractual Risks Under U.C.C. Section 2-615, 54 N.C.L. Rev. 545 (1976); Hawkland, The Energy Crisis and Section 2-615 of the Uniform Commercial Code, 79 Comm. L.J. 75 (1974); Note, UCC § 2-615: Sharp Inflationary Increases in Cost as Excuse from Performance of Contract, 50 N.D. Law. 297 (1974). On a specific case, see Joskow, Commercial Impossibility, the Uranium Market and the Westinghouse Case, 6 J. Legal Studies 119 (1977); Posner & Rosenfield, Impossibility and Related Doctrines in Contract Law: An Economic Analysis, 6 J. Legal Studies 83, 94-97 (1977).

On what constitutes reasonable efforts to surmount obstacles to performance, see Stock & Grove, Inc. v. United States, 204 Ct. Cl. 103, 493 F.2d 629 (1974); Northern Corp. v. Chugach Elec. Ass'n, supra. Cf. Foster Wheeler Corp. v. United States, 206 Ct. Cl. 533, 513 F.2d 588 (1975).

Illustration 6 is based on Blount-Midyette & Co. v. Aeroglide Corp., 254 N.C. 484, 119 S.E.2d 225 (1961). (This Section does not deal with the question, raised in that case, of who bears the burden of proof of fault or its absence. See 6 Corbin, Contracts § 1329 (1962).) See also Arnold v. Ray Charles Enterprises, 264 N.C. 92, 141 S.E.2d 14 (1965); Moha v. Hudson Boxing Club, 164 Wis. 425, 160 N.W. 266 (1916). Illustration 7 is based on Illustration 2 to former § 465; Northern Corp. v. Chugach Elec. Ass'n, supra; cf. Hanford v. Connecticut Fair Ass'n, 92 Conn. 621, 103 A. 838 (1918). Illustration 8 is based on Illustration 6 to former § 465; see The Kronprinzessin Cecilie, 244 U.S. 12 (1917); cf. Illustration 8 to former § 465. Illustration 9 is based on Transatlantic Financing Corp. v. United States, 363 F.2d 312 (D.C. Cir. 1966); see American Trading and Prod. Corp. v. Shell Internat'l Marine, Ltd., 453 F.2d 939 (2d Cir. 1972); Glidden Co. v. Hellenic Lines, 275 F.2d 253 (2d Cir. 1960); Ocean Tramp Tankers Corp. v. V/O Sovfracht (The Eugenia), [1964] 2 Q.B. 226 (C.A. 1963), overruling Societe Franco Tunisienne d' Armement v. Sidermar S.P.A., [1961] 2 Q.B. 278; see also Savage v. Peter Kiewit Sons' Co., 249 Or. 147, 432 P.2d 519 (1967); id., 249 Or. 147, 437 P.2d 487 (1968); id., 254 Or. 411, 461 P.2d 59 (1969); cf. Illustration 6 to former § 461. But cf. City of Vernon v. City of Los Angeles, 45 Cal.2d 710, 290 P.2d 841 (1955). Illustration 10 is based on Illustration 3 to former § 461. On the Suez cases, see Berman, Excuse for Nonperformance in the Light of Contract Practices in International Trade, 63 Colum. L. Rev. 1413 (1963); Birmingham, A Second Look at the Suez Canal Cases: Excuse for Non-performance of Contractual Obligations in the Light of Economic Theory, 20 Hastings L.J. 1393 (1969); Schlegel, Of Nuts, and Ships, and Sealing Wax, Suez, and Frustrating Things -- The Doctrine of Impossibility of Performance, 23 Rutgers L. Rev. 419 (1969). Illustration 11 is based on Pennsylvania State Shopping Plazas, Inc. v. Olive, 202 Va. 862, 120 S.E. 372 (1961); see Kiyoichi Fujikawa v. Sunrise Soda Water Works Co., 158 F.2d 490 (9th Cir.), cert. denied, 331 U.S. 832 (1946). Illustration 7 to former § 461, which dealt with the effect on a party's duties of a strike by his employees, is omitted, because the parties often provide for this eventuality and, where they do not, it is particularly difficult to suggest a proper result without a detailed statement of all the circumstances. See the court's discussion of this in Badhwar v. Colorado Fuel & Iron Corp., 138 F. Supp. 595, 607-08 (S.D.N.Y. 1955), aff'd, 245 F.2d 903 (2d Cir.), cert. denied, 355 U.S. 862 (1957); Mishara Constr. Co. v. Transit-Mixed Concrete Corp., 365 Mass 122, 129-31, 310 N.E.2d 363, 367-68 (1974); Annot., 70 A.L.R.3d 1259 (1974). But see Fritz-Rumer-Cooke Co. v. United States, 279 F.2d 200 (6th Cir. 1960).

Comment e.  See former § 455; 6 Corbin, Contracts § 1332 (1962 & Supp. 1980); 18 Williston, Contracts §§ 1932, 1960 (3d ed. 1978). For a criticism of the distinction between "subjective" and "objective" impossibility, see Patterson, The Apportionment of Business Risks Through Legal Devices, 24 Colum. L. Rev. 335, 349-50 (1924). Supporting the difference between "the thing cannot be done" and "I cannot do it," see Freeto v. State Highway Comm'n, 161 Kan. 7, 67, 166 P.2d 728, 762 (1946); Fast, Inc. v. Shaner, 183 F.2d 504 (3d Cir. 1950) (in which Goodrich, C.J., added: "If an elderly judge, for good consideration, promises to run 100 yards in 10 seconds and then fails to perform he can hardly be held to puff out the defense that he could not possibly run that fast."). Illustration 12 is based on Whitman v. Anglum, 92 Conn. 392, 103 A. 114 (1918). See also Jennie-O Foods v. United States, 580 F.2d 400 (Ct. Cl. 1978) (citing this Comment and Illustration in Tentative Draft); Bunge Corp. v. Recker, 519 F.2d 449 (8th Cir. 1975). Illustration 13 is based on Canadian Indus. Alcohol Co. v. Dunbar Molasses Co., 258 N.Y. 194, 179 N.E. 383 (1932); see Center Garment Co. v. United Refrig. Co., 369 Mass. 633, 341 N.E.2d 669 (1976); Swift Textiles v. Lawson, 135 Ga. App. 799, 219 S.E.2d 167 (1975); Schafer v. Sunset Packing Co., 256 Or. 539, 474 P.2d 529 (1970); Barcroft Woods, Inc. v. Francis, 201 Va. 405, 111 S.E.2d 512 (1959); El Rio Oils (Canada) Ltd. v. Pacific Coast Asphalt Co., 95 Cal. App.2d 186, 213 P.2d 1 (1949), cert. denied, 340 U.S. 850 (1950); Raisor v. Jackson, 311 Ky. 803, 225 S.W.2d 657 (1949); cf. Liner v. Armstrong Homes, 19 Wash. App. 921, 579 P.2d 367 (1978); Illustration 5 to former § 455 and Illustration 5 to former § 461. Illustration 14 is based on Fast, Inc. v. Shaner, supra; see Illustrations 5 and 6 to former § 455; Dworman v. Mayor of Morristown, 370 F. Supp. 1056 (D.N.J. 1974); John Soley & Sons v. Jones, 208 Mass. 561, 95 N.E. 94 (1911).

Comment f.  See former §§ 469 and 325(2); 6 Corbin, Contracts § 1330 (1962); 18 Williston, Contracts § 1961 (3d ed. 1978). Illustration 15 is based on Illustration 2 to former § 325 and Illustrations 1 and 4 to former § 469. In addition, courts sometimes speak of a party performing his duty in a practicable alternative method, even if the alternative is not specified in the contract. See Jennie-O Foods v. United States, 580 F.2d 400 (Ct. Cl. 1978); Chemetron Corp., v. McLouth Steel Corp., 381 F. Supp. 245 (N.D. Ill. 1974), aff'd, 522 F.2d 469 (7th Cir. 1975); cf. Transatlantic Fin. Corp. v. United States, 363 F.2d 312 (D.C. Cir. 1966) (custom of trade). In Illustration 16, as to the liability of S, see Illustration 5 to former § 459; Smith Eng'r Co. v. Rice, 102 F.2d 492, 499 (9th Cir. 1938), cert. denied, 307 U.S. 637 (1939). But cf. Kintner v. Wolfe, 102 Ariz. 164, 426 P.2d 798 (1967).

ALR Annotations:

Impracticability of performance of sales contract as defense under UCC § 2-615. 93 A.L.R.3d 584.
Validity and construction of preincorporation agreement between promoters as to future employment. 66 A.L.R.3d 1138.
Construction and effect of "dilution" provision of employee's stock-option contract, dealing with rights where stock structure of corporation changes before option is exercised. 59 A.L.R.3d 1030.
Zoning or other public restrictions on the use of property as affecting rights and remedies of parties to contract for the sale thereof. 39 A.L.R.3d 362.
Modern status of the rules regarding impossibility of performance as defense in action for breach of contract. 84 A.L.R.2d 12.
Right to reformation of contract or instrument as affected by intervening rights of third persons. 79 A.L.R.2d 1180.
Effect of provision in real-estate option or land sale contract making the contract subject to zoning or rezoning of the property. 76 A.L.R.2d 1195.
Comment Note. -- What law governs in determining whether facts and circumstances operate to terminate, breach, rescind, or repudiate a contract. 50 A.L.R.2d 254.

Digest System Key Numbers:

Contracts 309