Impossibility of Performance vs. Commercial Impracticability
A detailed comparison of these two contracts rules, including key differences, exam strategies, and guidance on when to apply each.
Overview
Impossibility and impracticability are excuse doctrines that discharge a party's contractual obligations when changed circumstances make performance fundamentally different from what was anticipated. They represent a historical evolution from a strict to a more flexible standard.
Impossibility of performance is the traditional common law doctrine. It applies when performance becomes literally impossible due to circumstances that arise after contract formation, such as the destruction of the specific subject matter (Taylor v. Caldwell), the death or incapacity of a person essential to performance, or a supervening change in law that makes performance illegal. The impossibility must be objective (no one could perform, not just this particular party) and must not have been foreseeable or caused by the party seeking discharge.
Commercial impracticability, codified in UCC Section 2-615 and Restatement (Second) of Contracts Section 261, is a broader and more modern doctrine. It discharges performance when a supervening event makes performance impracticable rather than literally impossible, provided the non-occurrence of the event was a basic assumption on which the contract was made and the party seeking discharge did not assume the risk. Impracticability does not require that performance be literally impossible, only that it has become excessively and unreasonably difficult or expensive due to unforeseen circumstances. Courts are reluctant to apply it for mere increases in cost, however. An increase in expense alone, even a dramatic one, does not necessarily establish impracticability unless it fundamentally alters the nature of the performance.
Key Differences
| Aspect | Impossibility of Performance | Commercial Impracticability |
|---|---|---|
| Standard | Performance must be literally impossible (objective impossibility) | Performance must be excessively difficult or expensive (not merely more costly) |
| Source | Traditional common law doctrine | UCC Section 2-615; Restatement (Second) Section 261 |
| Typical triggers | Destruction of subject matter, death, supervening illegality | Extreme cost increase, supply disruption, unforeseen regulatory changes |
| Foreseeability | Event must be unforeseeable and not caused by the party | Non-occurrence must be a basic assumption; foreseeable risks may be allocated by contract |
| Strictness | Very strict; performance must truly be impossible | More flexible but still high bar; not just increased expense |
Exam Tips
On a contracts exam, always discuss both impossibility and impracticability when changed circumstances arise. Start with impossibility: is performance literally impossible? If not, pivot to impracticability: has performance become excessively and unreasonably burdensome due to an unforeseen event? Remember that courts set a high bar for impracticability. A mere increase in cost, even a substantial one, typically does not suffice unless it fundamentally transforms the nature of performance. Also consider frustration of purpose as a related doctrine when the supervening event destroys the purpose of the contract rather than making performance itself more difficult.
When to Apply Which
Apply impossibility when something makes performance literally impossible, such as the destruction of the specific subject matter, death of a key person, or a new law prohibiting performance. Apply impracticability when performance remains technically possible but has become excessively burdensome due to unforeseen circumstances. The distinction matters because impracticability covers a broader range of situations but requires careful analysis of risk allocation and the magnitude of the changed circumstances.