What Happens When Impossibility in Contracts?

When a contractual obligation becomes impossible to perform due to unforeseen circumstances, the affected party may be excused from performance under the doctrine of impossibility. This can lead to discharge of the contract without liability for breach.

The doctrine of impossibility in contract law provides that if an unforeseen event occurs that makes performance of the contract objectively impossible, the parties may be released from their obligations. This applies to situations where the specific subject matter of the contract is destroyed or when a change in law renders the performance illegal. The rationale is that it would be unjust to hold a party liable for breaching a contract they cannot possibly fulfill due to circumstances beyond their control.

There are two primary types of impossibility: absolute impossibility and subjective impossibility. Absolute impossibility occurs when no one can perform the contract, such as when an essential item is destroyed. Subjective impossibility, however, refers to the inability of a particular party to carry out the contract due to their personal circumstances and does not typically excuse performance unless agreed upon.

A key case illustrating impossibility is *Taylor v. Caldwell* (1863), where a music hall's destruction by fire excused both parties from their contractual duties. Another important case is *Eastern Air Lines, Inc. v. Gulf Oil Corp.* (1982), which highlighted that unforeseen economic changes could also lead to a finding of impossibility under certain circumstances, although often requiring a showing of impracticality rather than outright impossibility.

It is important to note that the doctrine of impossibility does not apply if the risk of loss is assumed by one of the parties, or if the party seeking discharge has contributed to the condition resulting in impossibility. Therefore, parties are encouraged to include force majeure clauses in their contracts to specify conditions under which performance may be excused.

Overall, when analyzing a situation involving impossibility, the courts will look for clear evidence of the unforeseen event and whether it objectively makes performance impossible, as well as whether the parties had allocated the risk associated with such events.

• 1Taylor v. Caldwell (1863) - established doctrine of impossibility when an essential element of the contract is destroyed.
• 2Eastern Air Lines, Inc. v. Gulf Oil Corp. (1982) - considered economic impracticality under impossibility principles.
• 3Mineral Park Land Co. v. Howard (1930) - illustrated that impracticality may not justify discharge unless it meets impossibility standards.
• 4Caddy v. Webb (1920) - emphasized the importance of risk allocation for parties in the event of unforeseen circumstances.

• doctrine-of-frustration
• contractual-defenses
• commercial-impracticability