Source: Robin Roth, Senior Contracts Editor, Conferon, Inc.
E-Specs: May 21, 2003

The debate over excuse of performance due to Force Majeure is a frequent theme in industry publications these days because of the spate of unforeseen crises like SARS, war, and acts of terrorism. Previously ignored words like "inadvisable" and "impossible" are constantly probed for their true legal meanings, and often support is called upon from the "Restatement of Contracts," but just what is that?

The laws that govern contracts include state law (statutes) and common law (judge-made law through court decisions). Prominent legal scholars, recruited by The American Law Institute, organized the principles of the common law of contracts into the Restatement Second of the Law of Contracts, which is the updated version of the original Restatement. There are notes and examples and it may be used to support legal arguments even though it is not law.

To try to answer the question of what is impossibility, for example, one path starts with the principle of impracticability:

Where, after a contract is made, a party's performance is made impracticable without his fault by the occurrence of an event the non-occurrence of which was a basic assumption, on which the contract was made, his duty to render that performance is discharged, unless the language or the circumstances indicate the contrary. § 261

Intriguingly, "impracticability" and "impossibility" may both fall under the same umbrella in some cases:

Events that come within the rule stated in this Section are generally due either to "acts of God" or to acts of third parties… Although the rule stated in this Section is sometimes phrased in terms of "impossibility," it has long been recognized that it may operate to discharge a party's duty even though the event has not made performance absolutely impossible. This Section, therefore, uses "impracticable," the term employed by Uniform Commercial Code § 2-615(a), to describe the required extent of the impediment to performance. § 261

The above examples show that a superficially simple word like "impossible" has great depth of meaning when examined from a legal perspective. The debate over recent Force Majeure issues continues.

(Note: This information is not intended to be "legal advice." A qualified attorney should be consulted to review all contract issues.)