Contracts · Impossibility
Clear answer to: What Is The Difference Between Impossibility in Contracts? with key cases, examples, and exam tips for law students.
Impossibility in contracts refers to situations where contractual obligations cannot be performed due to unforeseen circumstances. The main types include 'impossibility of performance' and 'impossibility of purpose', each having distinct legal implications and applicability.
In contract law, 'impossibility' refers to circumstances where a party's performance under a contract becomes unachievable. The two primary forms are 'impossibility of performance' and 'impossibility of purpose'. Impossibility of performance arises when an event occurs that makes the performance of the contractual duties physically or legally impossible, such as the destruction of a subject matter essential to the contract. For example, if a rare painting is destroyed in a fire, the contract for its sale may be discharged due to impossibility of performance.
On the other hand, impossibility of purpose refers to situations when the underlying reason for entering into the contract can no longer be fulfilled. This generally occurs when a critical condition, such as a government regulation or a change in the law, prevents the fulfillment of the contract's intended purpose, such as renting a hall for a concert that is suddenly prohibited by law due to safety concerns.
Legal doctrines surrounding these forms of impossibility often require parties to prove that the event causing the impossibility was unforeseen and not due to their own fault. Courts typically require clear evidence of the impossibility, and context matters—what might be impossible in one situation may be otherwise in another, generally determined by a reasonable person standard.
It is crucial for law students to distinguish between these types of impossibility as they come with different defenses and remedies that can affect contractual obligations and their liabilities. Understanding case law and the factual nuances can aid in identifying which doctrine applies to various contract scenarios.
Consider a contract for the sale of a unique car that is destroyed in an accident before the sale. Here, impossibility of performance applies as the specific subject of the contract is no longer available. Conversely, if a concert venue is rented for an event that is later banned by a new law, that would be an example of impossibility of purpose, as the original intent of the contract cannot be fulfilled.
Exam questions may involve hypothetical scenarios requiring students to identify whether impossibility applies and differentiate between its forms. Students should analyze facts and apply relevant doctrine to provide a well-supported answer.