Breach of Contract Defense of Impossibility
Generally, the parties who have entered into a valid contract must perform their end of the deal or will be liable for damages from breaching the contract. However, when it has become impossible for one party to perform, his/her duty to perform may be discharged.
What Does “Impossibility” Mean?
There are actually several different meanings and degrees of impossibility in contract law. Here are two ways that the courts have normally used the word:
Absolute impossibility is the ordinary meaning that most people will think of - it is physically impossible for anyone to complete the promised performance.
Subjective Impossibility is almost the same as impracticability - it is extremely difficult if not impossible for the promiser to perform, but it is not absolutely impossible for someone else to do so.
Will A Defense of Absolute Impossibility Always Discharge The Breaching Party’s Duty To Perform?
No. There are numerous cases where even though performance had become physically impossible, the breaching party was still liable for damages for breach of contract. This typically occurs when the promisor somehow caused contract performance to be impossible or if it were foreseeable, or predictable, that contract performance would have become impossible.
However, this question of whether discharge will be granted is almost always dependent on the facts and circumstance of the case since courts in different jurisdiction apply different rules of law.
What Are Some Examples Of Absolute Impossibility?
Here are some ways that a promised performance can become absolutely impossible to do:
- The work that needs to be done has been destroyed or no longer exists;
- A natural disaster prevents the work from being completed;
- The law has changed and has made the work illegal to perform;
- The promiser has lost title to property due to bankruptcy;
- One of the parties passes away or ceases to exist;
- The work cannot be performed because a war has occurred.
What Are Some Examples of Subjective Impossibility?
Here are some ways that a promised performance can become subjectively impossible to do:
- Natural disasters make the price of performance abnormally high;
- Sudden wars make the price of performance abnormally high;
- A party deliberately makes a misrepresentation.
What Are Some Factors That Courts Look At When Determining Whether Discharge Should Be Granted?
Although the courts have not been uniform in the way they deal with the defense of impossibility, there are some general factors that they look at in determining whether discharge should be granted:
- What risks did the parties reasonably assume when they entered into the contract;
- Were the risks predictable;
- Are there any alternatives to discharge of the contract;
- What is the business custom in allocating the risk of nonperformance;
- How have the courts treated similar cases in the past.
How Can an Attorney Help Me?
You should speak with an experienced business attorney if you think you have a valid impossibility defense. An attorney can tell you the chance of success and also provide alternative defenses.
Consult a Lawyer - Present Your Case Now!
Last Modified: 04-09-2013 04:25 PM PDT
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