Key Takeaways

  • Impossibility of performance allows a party to be excused from a contract when unforeseen events make performance objectively impossible.
  • Courts assess factors such as unforeseeability, absence of fault, and whether performance has become commercially impracticable.
  • Common examples include destruction of subject matter, death or incapacity, changes in law, and government-imposed restrictions.
  • The doctrine is distinct from but often related to force majeure clauses, which may contractually allocate risks of impossibility.
  • Foreseeable events, self-caused impossibility, or mere increased costs typically do not qualify as valid defenses.
  • The COVID-19 pandemic highlighted modern applications of impossibility, including shutdown orders, supply chain disruptions, and legal prohibitions.

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.

How Will the Court Respond?

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:

  1. A contingency must have occurred, i.e., something unexpected
  2. The risk of the unexpected occurrence must not have been due to the negligence of either party
  3. The circumstance must have rendered performance under the contract commercially impracticable

All three things must be present in order for the court to deem an impossibility of performance; however, while a party might think it’s hard to prove, such arguments are common in contractual disputes. Most courts find that such disputes hold weight, and thus void the contract due to the impossibility of performing under the contract.

Factors Courts Consider in Impossibility Cases

When deciding whether the impossibility of performance doctrine applies, courts analyze the totality of circumstances surrounding the event that prevented performance. Beyond the core elements already mentioned, they also look at additional considerations such as:

  • Nature of the contingency: The event must be truly unforeseeable and not within the realm of ordinary business risks. For example, a sudden natural disaster or government-mandated closure often qualifies, whereas seasonal supply shortages may not.
  • Allocation of risk: If the contract explicitly assigns the risk of certain events to one party (through terms like “assume all risks of delay”), courts are less likely to excuse performance.
  • Partial impossibility: In some cases, only part of the contract becomes impossible. Courts may excuse the impossible portion while enforcing the remainder.
  • Temporary vs. permanent impossibility: If the event only suspends performance temporarily (e.g., a short-term government ban), obligations may resume once the impediment ends. Permanent impossibility usually terminates the contract entirely.
  • Alternative performance: If a party could reasonably perform by different means or substitute goods without fundamentally altering the contract’s nature, impossibility is less likely to succeed as a defense.

Examples of Impossibility of Performance

Below are some examples of impossibility of performance:

  1. One of the parties is injured and can no longer perform the duties identified in the contract
  2. Stolen or destroyed property, i.e., contract for home remodeling that can no longer be performed if the home is destroyed
  3. Weather conditions
  4. Natural disaster
  5. Government passes a law making the performance illegal

Modern Applications of Impossibility Doctrine

The COVID-19 pandemic dramatically expanded the practical relevance of impossibility of performance in commercial law. Courts have seen a surge in cases where parties were unable to perform because of:

  • Government restrictions: Orders prohibiting certain business operations (e.g., restaurant closures, event cancellations) often rendered contractual obligations impossible.
  • Travel bans and supply chain disruptions: In global contracts, restrictions on movement or export/import bans prevented delivery of goods and services.
  • Legal changes: Emergency legislation making performance unlawful automatically excuses the party.
  • Business shutdowns: Where contracts required in-person activities, mandatory shutdowns nullified the possibility of fulfillment.

These real-world scenarios demonstrate how impossibility evolves with social, legal, and economic conditions. Even long-standing agreements can be voided when global events fundamentally change performance conditions.

When is Impossibility of Performance Raised?

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. An example of this would be if a homeowner hires someone to install a new roof. If the home is destroyed by fire immediately before the other party began installing the new roof, then the court wouldn’t be able to enforce anything or provide remedy to either party since the fire itself was at no fault of either party.

Relationship to Force Majeure Clauses

While impossibility of performance is a common-law doctrine, many contracts also contain force majeure clauses that address similar situations. These clauses specify events—such as natural disasters, pandemics, wars, or government actions—that excuse or delay performance.

  • Overlap: If a contract includes a broad force majeure provision, courts often apply it before turning to common-law impossibility.
  • Gaps: If the clause is narrowly drafted or absent, parties may still rely on impossibility as a fallback defense.
  • Negotiation considerations: Businesses should review and update force majeure language to ensure it aligns with evolving risks, including pandemics and geopolitical events.

In practice, parties frequently invoke both doctrines together, strengthening their argument that performance was beyond their control.

When is Impossibility Not a Defense?

Impossibility isn’t a defense in the following circumstances:

  1. If the person making the promise in the contract is the one who caused the contract to become impossible to perform
  2. If the impossibility is foreseeable
  3. If the occurrence is not severe enough

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. However, if Sue causes the dog’s death before performance under the contract ensues, then John will not be required to pay Sue anything. 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. An example of this would be if John’s dog was very sick when John and Sue initially entered into the contract. Sue already knew when entering into the contract that John’s dog was very sick. Therefore, it is reasonably foreseeable that the dog might pass away before performance under the contract begins.

If the occurrence isn’t severe enough, then the defense of impossibility cannot be used. For example, if the cost of performance under the contract increases by a small amount, then the contract would still be enforceable. Some business transactions could see a fluctuation in price, particularly if the price of certain materials increases overtime. While other contractual disputes can arise based on the change in price, the impossibility defense can’t be used.

Alternatives and Related Doctrines

When impossibility does not apply, parties may turn to related doctrines, including:

  • Commercial impracticability: Even if performance is technically possible, it may be excused if it becomes excessively burdensome or expensive due to unforeseen events.
  • Frustration of purpose: If the contract’s fundamental purpose is destroyed (e.g., renting a venue for an event that’s legally prohibited), courts may discharge the parties’ obligations.
  • Rescission or renegotiation: Parties can mutually agree to terminate or modify the contract to reflect new realities.

However, these alternatives require strong evidence and often face strict judicial scrutiny. Merely citing financial difficulty or inconvenience is insufficient.

Frequently Asked Questions

  1. What is the difference between impossibility and frustration of purpose?
    Impossibility focuses on whether performance itself is objectively impossible. Frustration of purpose arises when performance is possible, but the contract’s main purpose is destroyed by unforeseen events.
  2. Can increased costs or financial hardship qualify as impossibility?
    Usually not. Courts expect parties to anticipate price changes or cost increases. Impossibility is reserved for circumstances that make performance objectively unachievable.
  3. Does a force majeure clause replace the impossibility doctrine?
    Not necessarily. A force majeure clause may supplement or clarify impossibility but does not eliminate the doctrine’s application if the clause is absent or incomplete.
  4. Can temporary impossibility suspend a contract?
    Yes. If the impediment is temporary (e.g., short-term government restriction), performance may be delayed rather than discharged entirely.
  5. How can businesses protect themselves against future impossibility claims?
    They should include clear force majeure clauses, define risk allocation, and consider insurance or alternative performance options when drafting contracts.

If you need help learning more about the impossibility of performance, or if you need legal assistance determining whether or not you can use this 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.