The rule
A changed contingency may excuse performance when the party did not bear its risk and the resulting burden makes performance commercially impracticable. Transatlantic separates unexpected contingency, allocation and practicability; foreseeability alone is not allocation. For sales, UCC 2-615 requires a qualifying basic-assumption contingency or good-faith compliance with an applicable government order; it preserves assumed greater obligations and requires fair allocation of partial capacity and seasonable notice, subject to reasonable substitute delivery under 2-614.
Elements
- An identified contingency affecting the agreed performance.
- No allocation or assumed greater obligation defeating the claimed excuse.
- Commercial impracticability assessed against the actual alternatives.
Exceptions and limits
- A reasonable substitute delivery method may be required under UCC 2-614.
- A partly affected seller must allocate fairly and reasonably and give the required seasonable notice.
When the issue arises
Start with the obligation. A promisor points to a closure, shortage, destruction or government order and claims that intervening circumstances defeated the basis for performance. Identify what changed. The existence of a physically possible alternative can make the dispute turn on cost, cargo, equipment and commercial circumstances, while destruction of the specifically identified subject presents a different problem from loss of the preferred method alone. Test the alternative concretely. Risk requires its own inquiry. Awareness does not necessarily assign it. Read any assumed greater obligation and examine the relevant context before treating an unexpected burden as either automatically excused or automatically allocated. Partial capacity introduces further duties. Notice also matters. For a goods seller, a qualifying contingency does not remove the need to address reasonable substitution, allocation and the buyer's information under the applicable provisions. Explain those remaining steps before declaring the whole delivery obligation discharged.
An expected route is not necessarily a condition
The Transatlantic charter named the voyage endpoints without specifying Suez as a required route. Canal closure therefore defeated the expected method, but the Cape remained a recognized alternative. The next question was whether that alternative was commercially practicable in the actual circumstances.
The opinion examined the wheat’s ability to survive the longer journey, the fitness of the vessel and crew, and the parties’ ability to assess and insure the risk. A bare statement that the trip became longer would leave those decisive facts unanalyzed.
Foreseeability is evidence, not allocation by itself
The parties contracted during an international crisis. Nevertheless, the court expressly declined to conclude that awareness alone assigned the closure risk to the carrier. It treated willingness to encounter abnormal risk as a reason to scrutinize the impracticability claim more strictly.
An exam answer should identify evidence in the agreement, trade practice and surrounding circumstances rather than infer an allocation from the word foreseeable. Also distinguish a promised result from an assumption about the means used to achieve it.
The carrier’s claimed additional expense was compared in the opinion with the contract price. That price is not necessarily its expected cost, so the case supplies neither a proved percentage increase over expected cost nor a universal numerical cutoff for excuse.
What the goods provisions require
UCC 2-615 addresses a seller’s delay or nondelivery caused by a qualifying basic-assumption contingency or good-faith compliance with an applicable government regulation or order. It preserves a greater obligation the seller assumed and makes excuse subject to its allocation and notice requirements.
If the event reduces only part of capacity, the seller must distribute available production and deliveries fairly and reasonably among customers. The provision permits including regular customers without current contracts and the seller’s own further-manufacturing requirements; it does not authorize an unexplained preference for whichever customer offers the highest price.
The buyer must receive seasonable notice of delay or nondelivery and, if allocation is required, the estimated quota. Before concluding that delivery is excused, check section 2-614: failure of the agreed facilities or method may call for a commercially reasonable substitute that must be tendered and accepted.
Compare destruction of the identified thing
Taylor concerned an identified music hall destroyed accidentally before the concerts. Its reasoning depended on that hall’s continued existence and the absence of an undertaking to bear its destruction risk. The fact that a particular subject is gone is different from a preferred route becoming unavailable while another route remains usable.
Physical completion also does not automatically defeat commercial impracticability. Transatlantic considered the claim after the voyage had been performed, but rejected both excuse on its facts and the carrier’s selective attempt to add extra expense to the contract price in restitution.
A simple fact pattern
Facts. The agreed unloading facility fails without either party’s fault. A nearby facility provides a commercially reasonable substitute with no material harm to the goods. Neither party assumed a contrary obligation in the contract.
Analysis. UCC 2-614(1) calls for tender and acceptance of the reasonable substitute. Failure of the named facility alone does not establish a right to abandon delivery. Identify why this alternative is commercially reasonable rather than simply calling it available.
A harder fact pattern
Facts. An unexpected shutdown reduces a seller’s capacity by half. Assume it is a qualifying basic-assumption contingency and the seller assumed no greater obligation. The seller sends all remaining output to a new customer willing to pay more, tells its contract buyers nothing and claims complete excuse.
Analysis. The shutdown qualifies by assumption, but the response still needs justification. Giving the entire remaining supply to the highest-paying newcomer does not explain a fair and reasonable distribution under 2-615(b). Silence creates another defect: the contract buyers receive neither timely information about the disruption nor an estimate of their production shares, leaving the notification requirement in subsection (c) unsatisfied on these facts. Evaluate both failures before accepting the seller's claim that every obligation disappeared. The qualifying event does not decide those remaining questions.
Compared with nearby doctrines
| Doctrine | How it differs |
|---|---|
| Impossibility | Destruction of the identified hall in Taylor left no equivalent performance of that undertaking. Transatlantic required analysis of an available alternative route. |
| Frustration of purpose | Ask whether the obstacle burdens performance or instead destroys the known purpose for receiving it. |
| Mutual mistake | Separate a mistaken assumption about an existing fact from an intervening event affecting performance. |
Common exam mistakes
- Treating foreseeable and contractually assumed as synonyms.
- Using the contract price as though it were necessarily expected performance cost.
- Declaring discharge before examining a reasonable substitute delivery method.
- Stopping at a qualifying contingency without addressing partial-capacity allocation and notice.
Practice questions
A farmer agrees to sell 1,000 bushels of corn at $5 per bushel. A regional drought raises the market price to $8, but the farmer’s contracted crop remains intact and delivery requires no added effort or expense. He refuses because selling elsewhere would be more profitable; which answer best applies UCC 2-615?
Answer and explanations
Correct answer: B.
Authority: UCC 2-615: excuse, allocation and notice
- A. Wrong. Naming a serious regional event does not establish its effect on this seller’s promised performance.
- B. Correct. The stated facts show only an opportunity to earn more elsewhere, while the contracted crop and delivery remain available without added burden.
- C. Wrong. Section 2-615 does not make the buyer accept a higher price simply because the seller prefers another sale.
- D. Wrong. Notice is a requirement for a qualifying excuse, not a substitute for demonstrating one.
More contracts practice questions and essays
Quick answers
Does completing the work prove it could not have been impracticable?
No. Physical possibility and commercial practicability differ. Transatlantic considered a completed voyage; it rejected relief after examining the alternative and the claimed remedy.
Is discussion of a risk enough to assign it to one party?
Not necessarily. Transatlantic declined that inference even though the parties knew of the canal crisis. The agreement and surrounding evidence still need analysis.
What must a partially affected goods seller tell its buyers?
Section 2-615(c) requires seasonable notice of delay or nondelivery and the estimated allocation quota when subsection (b) applies. Silence is not cured merely by showing that a qualifying event occurred.