Commercial Impracticability: Everything You Need to Know
Commercial impracticability means that performance under a contract is impracticable, and cannot be accomplished.3 min read
2. Examples of Commercial Impracticability
3. How to Determine Impracticability
Commercial impracticability means that performance under a contract is impracticable, and cannot be accomplished. This means that it is either difficult or impossible to perform under the contract.
The reason for impracticability is due to an unforeseen circumstance or event that doesn’t occur due to fault or negligence of either party. If after the occurrence, the parties can’t agree as to the proposed changes in the contract, the court will need to determine the commercial practicability of such performance and obligations.
Commercial Impracticability: An Overview
This legal doctrine is triggered when something occurs which would make it burdensome for the performing party to act under the contract. This doctrine would be used as a defense in a breach of contract claim that is brought by the plaintiff against the defendant. In this case, the defendant would argue that performance is commercially impracticable. It will be up to the judge to determine if it is in fact impracticable based on the event that triggered such a breach.
This doctrine can be found in the Uniform Commercial Code under section 2-615. This section provides the requirement that the event must have occurred due to an unforeseen or unexpected circumstance that occurred due to no fault of either party. This defense can prove difficult in some instances, particularly due to the fact that it deals with subjective issues – perceptions, expectations, and an understanding of the facts rather than the actual facts themselves.
Examples of Commercial Impracticability
There are several examples of commercial impracticability as follows:
- Natural disaster
- Weather-related event, i.e. flood, hurricane, tornado, earthquake
- Injury of the performer
- Death or disability of the third party involved in the contract
Let’s assume that Sarah, a homeowner, enters into a contract with Brian, an electrician. Brian is being contracted to do lighting work in Sarah’s backyard. Immediately after entering into the contract, but before performance has begun, a weather-related event occurs that causes significant flooding around Sarah’s home. Therefore, Brian is unable to complete the work due to such flooding issues.
Another example would be if after entering into the contract, Brian is physically injured and cannot complete the work on the date promised in the contract. In this case, performance under the contract will be delayed for a period of time until Brian is able to successfully complete the work.
How to Determine Impracticability
The following elements must be proven when using this doctrine as a defense:
- An unforeseen event or occurrence
- The occurrence must make performance difficult or impossible
- The parties must not have been able to foresee that the event would occur
The court will take into account the above elements, along with the circumstances regarding the contract, to determine if this defense is appropriate. The court will specifically look at the language of the contract to better determine the parties’ obligations under the contract.
The court could determine that performance is in fact impracticable, and order that the contract be voided. In this case, both parties can freely walk away from the contract with no liability.
However, if partial performance already took place when the event occurred, the party performing might want to be paid for the work he already performed at the time the event occurred. Therefore, the party could bring a suit against the other party for partial payment under the contract. While both parties agree that further performance would be impossible, the performing party wants the money that is due to him for the work that is already complete. The court could determine that any further performance is impracticable, but could further require that partial payment be made to make the plaintiff whole again.
We can see that there are a few instances when commercial impracticability can be brought in a contractual dispute, particularly when the parties can’t agree as to what other actions should be taken to restore both parties. Since such disputes can become complex, it is a good idea to speak to a qualified contract attorney who can assist you in determining your rights and obligations under a contract.
If you need help learning more about commercial impracticability, or if you need legal assistance regarding a contractual dispute in which you want to raise impracticability as a defense, you can post your legal need on UpCounsel’s marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.