Impracticability means the excuse in performance of a duty. Under the common law of contract, impracticability is a defense that can be relied on when the duty to be performed becomes unfeasibly difficult or expensive for a party who was to perform. The doctrine of impracticability arises out of the occurrence of a condition which prevents him/her from fulfilling the contract.
The following is an example of a case law defining impracticability:
Where, at the time a contract is made, a party's performance under it is impracticable without his fault because of a fact of which he has no reason to know and the non-existence of which is a basic assumption on which the contract is made, no duty to render that performance arises, unless the language or circumstances indicate the contrary.[Petroworks SA v. Rollings, 2009 U.S. Dist. LEXIS 21372 (D. Tex. 2009)].
The courts in U.S. follows certain tests for impracticability:
1. There must be an occurrence of a condition, the nonoccurence of which was a basic assumption of the contract;
2. The occurrence must make performance extremely expensive or difficult; and
3. This difficulty was not anticipated by the parties to the contract
Following is an example of a state statute (California) specifying commercial impracticability:
Cal U Com Code § 2615 provides “Except so far as a seller may have assumed a greater obligation and subject to the preceding section on substituted performance:
(a) Delay in delivery or nondelivery in whole or in part by a seller who complies with paragraphs (b) and (c) is not a breach of his duty under a contract for sale if performance as agreed has been made impracticable by the occurrence of a contingency the nonoccurrence of which was a basic assumption on which the contract was made or by compliance in good faith with any applicable foreign or domestic governmental regulation or order whether or not it later proves to be invalid.
(b) Where the causes mentioned in paragraph (a) affect only a part of the seller's capacity to perform, he must allocate production and deliveries among his customers but may at his option include regular customers not then under contract as well as his own requirements for further manufacture. He may so allocate in any manner which is fair and reasonable.
(c) The seller must notify the buyer seasonably that there will be delay or nondelivery and, when allocation is required under paragraph (b), of the estimated quota thus made available for the buyer.