Economic impossibility exists when the performance of a contract by a party has become extremely difficult or costly. The difference between impracticability and impossibility is that impracticability is still physically possible; However, performance creates considerable difficulties for the performing party. Impracticability excuses service if the excused party had no control (or was not to blame) over the condition that made the service unenforceable. In addition, the excused party must not have expressly or implicitly assumed the risk of impracticability of the obligations. In general, impracticability can only be found in extreme circumstances. In addition, the performance of the contract may become impossible if there is an additional or unexpected event that thwarts the terms of the contract. In this case, the parties may enforce the contract. Although the doctrine of impossibility exists in Illinois, the attorney who tries to excuse full performance and cancel the contract has a narrow opportunity, and the facts matter. Tom agrees to sell lobster to Suzie to sell in his restaurant.
Tom sets the price at a certain value in dollars per pound. Later, the government imposed a high tax on the sale of lobsters. If Tom continues to sell at the contract price, he will go bankrupt. What are Tom`s options? The legal extension of the meaning of “impossibility” as a defence (which, according to the common law, originally meant the literal or physical impossibility of performance) to “impossibility of performance” is now generally recognized as a valid defence (6 Williston on Contracts (rev.ed.) § 1931, pp. 5407-5411). Impossibility of performance and economic impossibility may release the obligation of a party to perform the contract. In addition, it will release the party from any liability in the event of non-performance. Each is explained below. A contract is a binding legal agreement between the parties who sign it. However, there are circumstances in which the parties are exempted from fulfilling their obligations without breaching the contract.
One of them is when, through no fault of one of the parties, an unforeseeable and unallocated risk has made it impossible to perform the contract as originally intended. An impossibility of performance exists if the contractual obligations and obligations of one or more parties cannot be fulfilled under normal circumstances. There are two types of impossibility of performance: post-contractual impossibility, also known as the doctrine of frustration, occurs when an impossibility to enter into a contract occurs after the creation of the contract. This type of impossibility invalidates the contract, and the parties involved are released from the execution of the contract, which corresponds to a released contract. The key question is to define what the true impossibility is and to determine what the real effect of the “impossibility” should be. In cases involving a defence of impossibility, one party may argue that it was impossible to enforce it, while the other party claims that it was only difficult or incriminating. This article is intended to discuss the essential elements of the defense of impossibility in California. This defence does not excuse the performance in which the promisor assumed the risk.4 Similarly, if the overall event giving rise to the impossibility was “reasonably foreseeable” and should have been contractually agreed at all corners of the agreement, the defence does not apply.
this event makes subsequent performance impossible or so difficult or costly that the object of the contract is thwarted or its value is destroyed; and to succeed under a defense of impossibility, a party must demonstrate that freedom of contract and the additional ability to enjoy the benefits of the contract or bear the cost of breach of contract is a valuable right of most Americans. The ability to control one`s personal and professional future by choosing the commitments to be made is at the heart of our economic and personal well-being. As one expert has already pointed out, contractual freedom is similar to the freedom to engage in the world of commerce, whether as a seller or as a consumer. An agreement exists if the receiving party accepts a service other than the service contractually due. All parties must accept the change. If impossibility is foreseeable or predictable, then the doctrine of impossibility cannot be used as a defence. An example of this would be when John`s dog was very sick when John and Sue first signed the contract. Sue already knew at the time of signing the contract that John`s dog was very sick. Therefore, it is reasonably foreseeable that the dog could die before the start of the performance of the contract.
There are three methods of voluntary relief: novation, agreement and satisfaction. Novation occurs when a new part is replaced for the performance of the contract, thus exempting the original part from the agreement. All parties must agree and a new contract with the same conditions will be created.