Impossibility of Performance of a Contract
What Is It? When Can It Be Used to Void a Contract?
Suppose you enter into a contract to deliver a quantity of manufactured goods to a customer. Your goods require a specific device as a part of the assembly process. After you enter into the contract, but before delivery is due, a worldwide pandemic hits, causing substantial interruptions of the supply chain. You can’t get the device you need from your supplier. You look for other sources, but none are available. Will you be liable for breach of contract if you fail to deliver on the specified date?
The Concept of “Impossibility of Performance”
There are few instances where, if all elements of a valid and enforceable contract are present, one of the parties can still void the agreement without being in breach of contract. One of those is what is commonly referred to as “impossibility of performance.” In essence, impossibility of performance can be used to terminate any contractual obligations when an unforeseen circumstance happens after an agreement is entered that makes fulfillment of a party’s obligations impossible. Specific examples of impossibility of performance include:
- The death or illness of a party, particularly with service-based agreements
- The subject matter of the contract is destroyed or damaged
- Weather conditions make performance impossible (frequently applicable to construction contracts)
- Natural disasters, such as a pandemic
- The subject matter of the contract becomes illegal (the government passes a new law)
What Are the Requirements to Void a Contract for Impossibility of Performance?
To successfully discharge any contractual duties because of impossibility of performance, a party must demonstrate that:
- There was an unanticipated and unforeseen event
- That the party seeking to void the contract did not bring about or contribute to bringing about
- That other methods of meeting the contractual obligations were attempted unsuccessfully
The party seeking to dissolve the contract has the burden of demonstrating that performance is impossible.
Contact MCIS Law
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