Category: Impossibility of performance breach of contract

By Thad Felton. As COVID continues to take its toll on the economy, some will be looking to avoid certain contractual obligations, while others will be looking to hold parties to their contractual obligations. For those looking to avoid their contractual obligations due to COVID in Illinois, one defense being discussed is the doctrine of impossibility of performance. The doctrine of impossibility of performance is also known as legal impossibility, legal impracticability and impossible performance.

The doctrine excuses contractual performance when the performance is rendered objectively impossible either by operation of law or because the subject matter of the contract has been destroyed.

See Innovative Modular Solutions v. Said another way, the doctrine is applied if there is an unanticipated circumstance that made the performance of the contract vitally different from what should reasonably have been within the contemplation of the parties at the time they entered into the contract.

May 7, However, the doctrine of impossibility is an exception. In an instance where the continued existence of a particular circumstance is so necessary to the performance of the contract that, by law, it is implied to be a condition of the contract, the destruction of that circumstance excuses, not just delays, performance.

Leonard v. A party raising impossibility as a defense to contract performance must show 1 an unanticipated circumstance, 2 that was not foreseeable, 3 that the party did not contribute to, and 4 and that the party seeking the defense tried all practical alternatives to avoid. Bank of America, N. Shelbourne Development Group, Inc. However, because the lawful purpose of a contract is to allocate risks that affect performance, and because contractual performance should only be excused in extreme circumstances, the doctrine is narrowly applied.

See YPI N. Courts in Illinois have applied the doctrine of impossibility of performance in the following instances:. Again, while the doctrine of impossibility exists in Illinois, the proponent seeking to excuse complete performance and nullify the contract has a narrow opportunity, and facts matter. If you have questions about the doctrine of impossibility — whether performance is excused or delayed — contact Thad Felton at taf greensfelder.

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Grounds for Contract Termination: Impossibility of Performance

By Thad Felton As COVID continues to take its toll on the economy, some will be looking to avoid certain contractual obligations, while others will be looking to hold parties to their contractual obligations. When can impossibility be applied? In addition, there are several important caveats to the application of the doctrine.

First, the doctrine does not apply to excuse performance as long as it lies within the power of the party invoking the doctrine to remove the obstacle to performance. See Downs v.

Impossibility of Performance: Everything You Need to Know

Second, the defense of impossibility fails when the party invoking it has not made reasonable efforts to prevent the occurrence of the event that has made performance impossible, i. See First Nat.

impossibility of performance breach of contract

Bank of Chicago v. Atlantic Tele-Network Co. Third, the party asserting the doctrine must not have contributed to the circumstances causing the alleged impossibility. BCS Inc. And fourth, the party advancing the doctrine has the burden of proving impossibility. See Michigan Avenue National Bank v.

State Farm Insurance Companies83 Ill. Courts in Illinois have applied the doctrine of impossibility of performance in the following instances: Borrower defended its inability to obtain a construction loan commitment by a date certain, which resulted in the bank accelerating amounts due under a loan, by claiming that unforeseeable and unprecedented economic downturn and recession made its performance impossible.

In an old Illinois Supreme Court case, the court addressed the issue of whether a school district was required to pay a teacher who was ready, able and willing to teach during the time the school was closed by the state board of health as a result of an influenza epidemic.Predominant common law doctrines that may be raised as affirmative defenses in breach of contract cases are impossibility of performance, impracticability, and frustration of purpose.

Although these doctrines are similar, and are often conflated, the factual circumstances under which they arise are distinct. Parties seeking to rely on these doctrines must understand their nuances and appreciate the difficulty of prevailing under these doctrines in Delaware courts. As affirmative defenses, they must be raised in an initial pleading, usually an Answer to a Complaint. The defenses of impossibility and impracticability are explained below. Commercial frustration will be covered in a future article.

The doctrine of impossibility generally applies where performance is impossible due to: changes in domestic law; the death or illness of an individual identified to personally perform an essential act under the contract; or the destruction or change in character of the object of the contract. This defense will not excuse performance where the promisor assumed the risk.

In the context of COVID, some Delaware cases note that the impossibility defense may be available where performance is prevented by governmental action. A party may be excused from a contractual breach by supervening impracticability under certain limited circumstances. This provision applies only to the sale of goods, however; it does not apply to contracts for services.

Similar to impossibility, the defense will not apply if the event precipitating the impracticability was reasonably foreseeable; and indeed, the defense is commonly defeated on those grounds.

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Both impossibility and impracticability require circumstances that the parties did not contemplate at the time their contract was made, and that neither party assumed the risk of such circumstances. Performance under the contract must be rendered impossible or impracticable due to the unforeseen circumstances. In the context of COVID, performance under a contract may be delayed, but not rendered impossible.

It is unclear whether a delay renders performance so commercially impracticable as to warrant relief in an action for breach of contract.

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By continuing to browse this website you accept the use of cookies. Damon FerraraJohn Newcomer, Jr. To embed, copy and paste the code into your website or blog:. But what happens when a contract omits or contains a sparse force majeure clause? In those circumstances, common law contract principles may provide a defense to claims of contractual breach caused by the COVID pandemic. Send Print Report. Morris James LLP.In some cases, a contract can be ended even before the parties have the chance to fulfill their contractual duties and responsibilities.

Some common grounds for contract termination may include:. Contract termination can sometimes be necessary for both parties. It can sometimes be based on the surrounding circumstances, as is commonly the case with contract impossibility.

Impossibility of Performance: What Happens if Performance Becomes Impossible?

Impossibility is when the duties and contractual obligations of one or more parties cannot be fulfilled under normal circumstances. Some examples of this may include:. Impossibility of performance is often raised as a defense for breach of contract.

For example, the party that is accused of breach may be excused from the breach if they can prove that it would have been impossible to perform the contract. This proof can sometimes be complex and usually requires the assistance of a lawyer or expert witness.

impossibility of performance breach of contract

In addition to impossibility, some similar contract defenses include impracticability and frustration. Impracticability occurs where it has become impracticable or unreasonable for one or both parties to proceed with their contract duties. This is sometimes more difficult to prove than impossibility, since the duties might still be performed, but are difficult to do so in some way. Frustration occurs where the overall purpose of the contract has been frustrated or negated. Impossibility or impracticability is not a defense if the person making the promise in the contract caused the contract to be impossible or impracticable.

Note that this only applies to the party making the promise. Impossibility and impracticability is not a defense if the impossibility or impracticability is foreseeable. Foreseeable means that a party could have predicted that the event causing the contract to be impossible or impracticable would occur.

Impracticability is not a defense if the situation is not severe enough. In many business transactions, contract performance may often result in more costs than a party could foresee. A mere increase in costs though is not a barrier to contract enforcement unless the costs are extreme and unreasonable. Yes, contracts can specifically state who will bear the costs of non-performance due to impossibility, impracticability or frustration of performance.

That contract provision will not cover other methods of impossibility, such as warfare or a government declaring the sales of the product illegal. Terminating a contract can often be a complex and legally intensive process.Many construction contracts contain language specifying completion of the project within a certain timeframe. But as we all know, there are many factors that can make even the most generous construction schedule impossible.

First things first: Impossibility of performance is a recognized defense under Florida law. As a federal judge from Pensacola explained in a case, Metric Systems Corp. McDonnell Douglas Corp. In a more recent case fromKamel v. The facts of the Kamel case are worth mentioning in order to gain a broader understanding of the impossibility defense.

The plaintiffs were a married couple that signed a contract with the defendant to build their house. When the defendant failed to meet the one year and 11 months deadline, the plaintiffs attempted to revoke the contract and secure a refund of their deposit.

The defendant balked, prompting the lawsuit.

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Once again, whether an impossibility defense is viable will depend on the facts of a given case. That is why it is critical to consult with a qualified Florida construction contract attorney before taking any legal action. Gerhardt M. Witt v. La Gorce Country Club, Inc. ITT Industries, Inc. Weekly, D Fla. Precision Roofing Corp. Benson Electric, Inc. Tom Quinn Co. Close Menu.Last updated: Apr 20, Published: Mar 22, Reading time: 3 minutes. A good indicator of a well-drafted contract is that it accounts for every possible scenario within reason, of course.

For instance — what happens if it becomes impossible to perform your work? Impossibility of performance is a defense for breach of contract. In situations where performance becomes impossible, if proven, the impossibility of performance will protect a construction business from some, and potentially all, damages stemming from their failure to perform. Impossibility of performance could arise under some different situations, including death or disability of a necessary and irreplaceable party, destruction of the project property, or when performance would be illegal.

This rarely applies to any contractors, project managers or superintendents because someone else can always be brought in to do their work. However, if something can be replaced relatively easily and overall performance is still possible, impossibility of performance might not be an excuse for nonperformance.

An excellent example of this would be a renovation contract. Suppose a contractor is hired to do renovations and repairs on a building. However, before starting work, a fire ends up destroying the structure. The existence of the building itself was essential to the contract, thereby excusing the contractor from the performance.

When does the doctrine of impossibility of performance apply in Illinois?

If performing under the contract would be illegal, that may result in performance being considered impossible.

In those situations, courts have found that a failure to perform should be excused. A small shift in the degree of difficulty or expense does not amount to impracticability unless it goes way beyond the normal range. Particularly in fixed-price contracts, changes in costs are considered an assumed risk. The frustration of purpose is pretty similar to impracticability.

The frustration must be substantial. Most courts are pretty reluctant to grant the defense of frustration of purpose. In the construction context, this is particularly rare. One case where this was allowed was a contractor hired to repair fire damage.


The homeowners were in the middle of divorce proceedings and waiting on the insurance claim to pay for repairs. The court issued a freeze from transferring assets; the contractor stopped work and filed suit.

The court granted the homeowner the defense of frustration of purpose. They stated that the usage of insurance payment for repairs was the basis upon which the parties contracted. Courts look at whether or not a risk was foreseeable and whether the risk was assumed by the parties when making determinations about the impossibility of performance, impracticability, or frustration. Consider foreseeability and risk as defenses-to-defenses. Was the event which made performance impossible foreseeable at the time the contract was formed?

If the event were foreseeable, the courts would deny the defense of impossibility because the risk was from the outset. Parties often assume the risk of certain events that may cause impossibility. Some examples are representations and warranties, indemnification clausesor risk of loss clauses. View Profile. Lien waivers are an important part of optimizing construction payment. Property owners and GCs rely on waivers to manage the Mar 6, Read more.

The practice of retainage, aka retention, has a tremendous impact on the construction industry.Impossibility of performance is a doctrine whereby one party can be released from a contract due to unforeseen circumstances that render performance under the contract impossible. When a court looks at this type of legal dispute, it will have to look at the condition of the performance based on the circumstances that have changed from the initial date when the contract was entered into.

In order to do this, the following must have occurred:. Most courts find that such disputes hold weight, and thus void the contract due to the impossibility of performing under the contract. Below are some examples of impossibility of performance :.

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This is raised as a defense in a breach of contract claim. For example, if the plaintiff alleges that the defendant breached his contractual duties, the defendant would bring this claim indicating that he cannot perform under the contract due to one of the above-mentioned scenarios. Therefore, if the contract involves a homeowner paying a contractor to remodel his backyard and a hurricane occurs, then the contractor cannot be held liable for not performing, as performance during the time of the hurricane is impossible.

If the court agrees with the defendant, then the entire contract will be terminated. Furthermore, if performance under the contract is no longer physically possible, then future performance would also be excused.

impossibility of performance breach of contract

An example of this would be if a homeowner hires someone to install a new roof. An example of someone causing performance to be impossible would be if John promises to pay Sue if she agrees to take care of his dog for a week. In fact, John can bring a claim against Sue for the death of his dog and recover. If the impossibility is foreseeable, or predictable, then the impossibility doctrine cannot be used as a defense. Therefore, it is reasonably foreseeable that the dog might pass away before performance under the contract begins.

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