Impracticability (Commercial)
What is the Impracticability (Commercial)?
Commercial impracticability excuses performance when an unforeseen supervening event makes performance extremely and unreasonably difficult or expensive, beyond the risks the promisor assumed.
Source: Mineral Park Land Co. v. Howard, 172 Cal. 289 (1916)
Definition
Commercial impracticability, codified in UCC section 2-615 and Restatement (Second) of Contracts section 261, excuses a party from performing contractual obligations when performance has been made impracticable by the occurrence of an event whose nonoccurrence was a basic assumption on which the contract was made. Unlike impossibility, which requires that performance be literally impossible, impracticability requires only that performance has become extremely and unreasonably difficult, burdensome, or expensive due to an unforeseen supervening event.
The doctrine is most commonly invoked in commercial contexts where market disruptions, supply shortages, embargoes, natural disasters, or governmental regulations dramatically alter the cost or method of performance. However, courts apply the doctrine cautiously. A mere increase in cost, even a substantial one, is generally insufficient—the increase must be extreme and result from an unforeseen contingency that alters the essential nature of the performance. The party claiming impracticability must also show that the risk of the event was not allocated to them by the contract, custom, or trade usage.
Under UCC 2-615, a seller is excused from timely delivery when performance has been made impracticable by the occurrence of a contingency whose nonoccurrence was a basic assumption. If the impracticability affects only part of the seller's capacity, the seller must allocate production and deliveries among customers in a fair and reasonable manner. The buyer has the right to modify or terminate the contract upon receiving notification of the impracticability.
Key Elements
- 1A supervening event occurs after contract formation
- 2The event makes performance extremely and unreasonably difficult or costly
- 3The nonoccurrence of the event was a basic assumption of the contract
- 4The event was not foreseeable at the time of contracting
- 5The risk of the event was not allocated to the party claiming impracticability
- 6The party claiming impracticability is not at fault for the event
Landmark Cases
Mineral Park Land Co. v. Howard
172 Cal. 289 (1916)
Early case holding that performance was excused when extracting gravel below the water line would cost ten to twelve times the market price, effectively treating extreme cost as equivalent to impossibility.
Transatlantic Financing Corp. v. United States
363 F.2d 312 (D.C. Cir. 1966)
Denied impracticability claim when the Suez Canal closure required a longer route, holding that a 33% cost increase was not sufficiently extreme.
Alcoa v. Essex Group, Inc.
499 F. Supp. 53 (W.D. Pa. 1980)
Found impracticability in a long-term aluminum smelting contract where the pricing formula became radically inadequate due to unforeseen OPEC oil price increases.
Eastern Air Lines, Inc. v. Gulf Oil Corp.
415 F. Supp. 429 (S.D. Fla. 1975)
Rejected impracticability defense in an oil supply contract despite the 1973 oil embargo, finding the risk was foreseeable and allocated to the seller.
Exam Tips
- Impracticability requires more than increased cost—look for costs that are extreme and unforeseen, fundamentally changing the nature of performance.
- Always check whether the risk was allocated by the contract, trade usage, or course of dealing before applying impracticability.
- Distinguish impracticability (extreme difficulty) from impossibility (literally cannot be done) and frustration of purpose (performance possible but value destroyed).
- Under UCC 2-615, the seller must allocate fairly among customers if impracticability only partially affects capacity.
Common Mistakes to Avoid
- Treating any cost increase as sufficient for impracticability—courts require extreme and unreasonable difficulty, not mere increased expense.
- Failing to analyze foreseeability: if the risk was foreseeable at contracting, impracticability is generally not available.
- Confusing impracticability with frustration of purpose—impracticability focuses on the difficulty of performing, while frustration focuses on the destruction of the purpose for which the contract was made.
Memory Aid
Impracticability = 'It can be done, but it would be INSANELY hard or expensive beyond what anyone foresaw.' Not just hard—unreasonably so.