Chapter 11. Impracticability Of Performance And Frustration Of Purpose (261-272)

Question 1

On June 1, A agrees to sell and B to buy goods to be delivered in October at a designated port. The port is subsequently closed by quarantine regulations during the entire month of October, no commercially reasonable substitute performance is available (see Uniform Commercial Code § 2-614(1)), and A fails to deliver the goods. Is A’s duty discharged? Is there a breach?

Answer 1

A’s duty to deliver the goods is discharged, and A is not liable to B for breach of contract. Restatement 2d of Contracts § 261(b)

Question 2

A contracts to produce a movie for B. As B knows, A’s only source of funds is a $100,000 deposit in C bank. C bank fails, and A does not produce the movie. Is A’s duty discharged? Is there a breach?

Answer 2

A’s duty to produce the movie is not discharged, and A is liable to B for breach of contract. Restatement 2d of Contracts § 261(b)

Question 3

A and B make a contract under which B is to work for A for two years at a salary of $50,000 a year. At the end of one year, A discontinues his business because governmental regulations have made it unprofitable and fires B. Is A’s duty discharged? Is there a breach?

Answer 3

A’s duty to employ B is not discharged, and A is liable to B for breach of contract. Restatement 2d of Contracts § 261(b)

Question 4

A contracts to sell and B to buy a specific machine owned by A to be delivered on July 30. On July 29, as a result of a creditor’s suit against A, a receiver is appointed and takes charge of all of A’s assets, and A does not deliver the goods on July 30. Is A’s duty discharged? Is there a breach?

Answer 4

A’s duty to deliver the goods is not discharged, and A is liable to B for breach of contract. Restatement 2d of Contracts § 261(b)

Question 5

A, who has had many years of experience in the field of salvage, contracts to raise and float B’s boat, which has run aground. The contract, prepared by A, contains no clause limiting A’s duty in the case of unfavorable weather, unforeseen circumstances, or otherwise. The boat then slips into deep water and fills with mud, making it impracticable for A to raise it. Is A’s duty discharged? Is there a breach? How might a court decide?

Answer 5

If the court concludes, on the basis of such circumstances as A’s experience and the absence of any limitation in the contract that A prepared, that A assumed an absolute duty, it will decide that A’s duty to raise and float the boat is not discharged and that A is liable to B for breach of contract. Restatement 2d of Contracts § 261(c)

Question 6

A contracts to repair B’s grain elevator. While A is engaged in making repairs, a fire destroys the elevator without A’s fault, and A does not finish the repairs. Is A’s duty discharged? Is there a breach?

Answer 6

A’s duty to repair the elevator is discharged, and A is not liable to B for breach of contract. See Illustration 3 to § 263. Restatement 2d of Contracts § 261(d)

Question 7

A contracts with B to carry B’s goods on his ship to a designated foreign port. A civil war then unexpectedly breaks out in that country and the rebels announce that they will try to sink all vessels bound for that port. A refuses to perform. Is A’s duty discharged? Is there a breach?

Answer 7

Although A did not contract to sail on the vessel, the risk of injury to others is sufficient to make A’s performance impracticable. A’s duty to carry the goods to the designated port is discharged, and A is not liable to B for breach of contract. Compare Illustration 5 to § 262. Restatement 2d of Contracts § 261(d)

Question 8

A contracts with B to carry B’s goods on his ship to a designated foreign port. A civil war then unexpectedly breaks out in that country and the rebels announce that they will confiscate all vessels found in the designated port. The goods can be bought and sold on markets throughout the world. A refuses to perform. Is A’s duty discharged? Is there a breach? How might a court conclude otherwise?

Answer 8

Although there is no risk of injury to persons, the court may conclude that the risk of injury to property is disproportionate to the ends to be attained. A’s duty to carry the goods to the designated port is then discharged, and A is not liable to B for breach of contract. If, however, B is a health organization and the goods are scarce medical supplies vital to the health of the population of the designated port, the court may conclude that the risk is not disproportionate to the ends to be attained and may reach a contrary decision. Restatement 2d of Contracts § 261(d)

Question 9

Several months after the nationalization of the Suez Canal, during the international crisis resulting from its seizure, A contracts to carry a cargo of B’s wheat on A’s ship from Galveston, Texas to Bandar Shapur, Iran for a flat rate. The contract does not specify the route, but the voyage would normally be through the Straits of Gibraltar and the Suez Canal, a distance of 10,000 miles. A month later, and several days after the ship has left Galveston, the Suez Canal is closed by an outbreak of hostilities, so that the only route to Bandar Shapur is the longer 13,000 mile voyage around the Cape of Good Hope. A refuses to complete the voyage unless B pays additional compensation. Is A’s duty discharged? Is there a breach?

Answer 9

A’s duty to carry B’s cargo is not discharged, and A is liable to B for breach of contract. Restatement 2d of Contracts § 261(d)

Question 10

Several months after the nationalization of the Suez Canal, during the international crisis resulting from its seizure, A contracts to carry a cargo of B’s wheat on A’s ship from Galveston, Texas to Bandar Shapur, Iran for a flat rate. The contract does not specify the route, but the voyage would normally be through the Straits of Gibraltar and the Suez Canal, a distance of 10,000 miles. While A’s ship is in the Suez Canal, the Suez Canal is closed by an outbreak of hostilities, preventing the completion of the voyage. Is A’s duty discharged? Is there a breach?

Answer 10

A’s duty to carry B’s cargo is discharged, and A is not liable to B for breach of contract. Restatement 2d of Contracts § 261(d)

Question 11

A contracts to construct and lease to B a gasoline service station. A valid zoning ordinance is subsequently enacted forbidding the construction of such a station but permitting variances in appropriate cases. A, in breach of his duty of good faith and fair dealing (§ 205), makes no effort to obtain a variance, although variances have been granted in similar cases, and fails to construct the station. Is A’s duty discharged? Is there a breach? Why?

Answer 11

A’s performance has not been made impracticable. A’s duty to construct is not discharged, and A is liable to B for breach of contract. Restatement 2d of Contracts § 261(d)

Question 12

A, a milkman, and B, a dairy farmer, make a contract under which B is to sell and A to buy all of A’s requirements of milk, but not less than 200 quarts a day, for one year. B may deliver milk from any source but expects to deliver milk from his own herd. B’s herd is destroyed because of hoof and mouth disease and he fails to deliver any milk. Is B’s duty discharged? Is there a breach?

Answer 12

B’s duty to deliver milk is not discharged, and B is liable to A for breach of contract. See Illustration 1 to § 263. compare Illustration 7 to § 263. Restatement 2d of Contracts § 261(e)

Question 13

A contracts to sell and B to buy on credit 1,500,000 gallons of molasses “of the usual run from the C sugar refinery.” C delivers molasses to others but fails to deliver any to A, and A fails to deliver any to B. Is A’s duty discharged? Is there a breach?

Answer 13

A’s duty to deliver molasses is not discharged, and A is liable to B for breach of contract. If A has a contract with C, C may be liable to A for breach of contract. Restatement 2d of Contracts § 261(e)

Question 14

A, a general contractor, is bidding on a construction contract with B which gives B the right to disapprove the choice of subcontractors. A makes a contract with C, a subcontractor, under which, if B awards A the contract, A will obtain B’s approval of C and C will do the excavation for A. A is awarded the contract by B, but B disapproves A’s choice of C, and A has the excavation work done by another subcontractor. Is A’s duty discharged? Is there a breach?

Answer 14

A’s duty to have C do the excavation is not discharged, and A is liable to C for breach of contract. Restatement 2d of Contracts § 261(e)

Question 15

On June 1, A contracts to sell and B to buy whichever of three specified machines A chooses to deliver on October 1. Two of the machines are destroyed by fire on July 1, and A fails to deliver the third on October 1. Is A’s duty discharged? Is there a breach?What would have to happen for this to be otherwise?

Answer 15

A’s duty to deliver a machine is not discharged, and A is liable to B for breach of contract. If all three machines had been destroyed, A’s duty to deliver a machine would have been discharged, and A would not have been liable to B for breach of contract. See Uniform Commercial Code § 2-613. Restatement 2d of Contracts § 261(f)

Question 16

A contracts to repair B’s building. The contract contains a valid provision requiring A to pay liquidated damages if he fails to make any of the repairs. S is surety for A’s performance. Before A is able to begin, B’s building is destroyed by fire. Neither A’s nor S’s duty is one to render an alternative performance. Is any party’s duty discharged? Is there any breach for any party?

Answer 16

A’s duty to repair the building is discharged, and A is not liable to B for liquidated damages or otherwise for breach of contract. S’s duty as surety for A is also discharged, and S is not liable to B for breach of contract. Restatement 2d of Contracts § 261(f)

Question 17

A contracts to employ B as his confidential secretary for a year. B dies before the end of the year. Is B’s duty discharged? Is there a breach?

Answer 17

B’s duty to work for A is discharged, and B’s estate is not liable to A for breach of contract. Restatement 2d of Contracts § 262(a)

Question 18

A contracts to employ B as his confidential secretary for a year. A dies before the end of the year, and B takes other employment. Is B’s duty discharged? Is there a breach?

Answer 18

B’s duty to work for A is discharged, and B is not liable to A’s estate for breach of contract. Restatement 2d of Contracts § 262(a)

Question 19

A, a corporation, contracts to employ B as its secretary for five years. Within that time the state legislature enacts a law requiring the dissolution of corporations engaged in A’s business. Is A’s duty discharged? Is there a breach? What claim, if any, might B have against A?

Answer 19

On dissolution, A’s duty to employ B is discharged, and A is not liable to B for breach of contract. See also § 264. B may have a claim against A under the rule stated in § 272(1). Restatement 2d of Contracts § 262(a)

Question 20

The facts being otherwise as in Illustration 3, A’s dissolution is voluntary or the result of insolvency. Is A’s duty discharged? Is there a breach?

Answer 20

A’s duty to employ B is not discharged, and A is liable to B for breach of contract. See Comment b and Illustration 3 to § 261. Cf. Illustration 5 to § 319. Restatement 2d of Contracts § 262(a)

Question 21

A contracts with B to produce a play starring C, a famous actor, in B’s theater on December 16. Early in December, while the play is being performed elsewhere, C experiences a worsening throat condition and, although it does not prevent his performing, he is advised by his doctor to cancel his further performances and have a minor operation. On December 12, A notifies B that the December 16 performance of the play is cancelled for this reason. Is A’s duty discharged? Is there a breach?

Answer 21

A’s duty to produce the play is discharged, and A is not liable to B for breach of contract. Compare Illustration 7 to § 261. Restatement 2d of Contracts § 262(a)

Question 22

A contracts with B to cut a tract of standing timber. A dies, and his estate refuses to complete performance. Is A’s duty discharged? Is there a breach?

Answer 22

In the absence of special circumstances showing that A’s personal service or supervision is necessary to performance of his duty, A’s duty to cut the timber is not discharged, and A’s estate is liable to B for breach of contract. Restatement 2d of Contracts § 262(b)

Question 23

A and B make a contract under which A is to devote full time to prospecting for coal on B’s land, and, if he is successful, B personally is to finance and manage a corporation for the exploitation of the coal. B is to pay A a salary and convey to him a one-quarter interest in any resulting corporation. A locates coal and is paid his salary, but B dies before he is able to finance and manage a corporation to exploit it, and no such corporation is formed. What will determine if B’s duty discharged and whether there’s a breach? What claim, if any, might A have against B?

Answer 23

Whether performance of B’s duty to finance and manage a corporation became impracticable on B’s death depends on whether that duty, as understood by the parties, could only be performed by B himself. If the court concludes that it could, B’s duty to convey an interest in any resulting corporation is discharged, and B’s estate is not liable to A for breach of contract. A may have a claim against B under the rule stated in § 272(1). Restatement 2d of Contracts § 262(b)

Question 24

A and B, a firm of architects, contract with C to design a building for C. It is understood by the parties that both A and B shall render services under the contract. A dies and B fails to complete performance. Is any party’s duty discharged? Is there a breach for any party?

Answer 24

Both A’s and B’s duties to design the building are discharged, and neither A’s estate nor B is liable to C for breach of contract. Restatement 2d of Contracts § 262(b)

Question 25

A and B, a firm of contractors doing an extensive business in many localities, contract with C to fill a tract of low land. A dies and B fails to complete performance. Is any party’s duty discharged? Is there a breach for any party?

Answer 25

Neither A’s nor B’s duty to fill the land is discharged, and both A’s estate and B are liable to C for breach of contract. Restatement 2d of Contracts § 262(b)

Question 26

A contracts to sell and B to buy cloth. A expects to manufacture the cloth in his factory, but before he begins manufacture the factory is destroyed by fire without his fault. Although cloth meeting the contract description is available on the market, A refuses to buy and deliver it to B. Is A’s duty discharged? Is there a breach?

Answer 26

A’s duty to deliver the cloth is not discharged, and A is liable to B for breach of contract. See Illustration 12 to § 261. compare Illustration 7 to § 263. Restatement 2d of Contracts § 263(a)

Question 27

A contracts to sell and B to buy cloth. A expects to manufacture the cloth in his factory, but before he begins manufacture the factory is destroyed by fire without his fault. Is A’s duty discharged? Is there a breach?

Answer 27

A’s duty to deliver the cloth is discharged, and A is not liable to B for breach of contract. Cf. Illustration 13 to § 261. Restatement 2d of Contracts § 263(a)

Question 28

A contracts with B to shingle the roof of B’s house. When A has done part of the work, much of the house including the roof is destroyed by fire without his fault, so that he is unable to complete the work. Is A’s duty discharged? Is there a breach?

Answer 28

A’s duty to shingle the roof is discharged, and A is not liable to B for breach of contract. Compare Illustration 6 to § 261. Restatement 2d of Contracts § 263(a)

Question 29

A contracts with B to build a house for B. When A has done part of the work, much of the structure is destroyed by fire without his fault. A refuses to finish building the house. Is A’s duty discharged? Is there a breach?

Answer 29

A’s duty to build the house is not discharged, and A is liable to B for breach of contract. Restatement 2d of Contracts § 263(a)

Question 30

A contracts to sell a specified machine to B for $10,000. Before A tenders the machine to B, a fire destroys it without A’s fault. Is A’s duty discharged? Is there a breach?

Answer 30

A’s duty to deliver the machine is discharged (Uniform Commercial Code § 2-613), and A is not liable for breach of contract. Compare Illustration 4 to § 267. Restatement 2d of Contracts § 263(a)

Question 31

A contracts with B to drive logs to B’s mill during the following spring. Although the contract does not specify a particular stream, the parties know that there is only one stream down which the logs can be driven. An extraordinary drought dries that stream up during the time for performance. Is A’s duty discharged? Is there a breach?

Answer 31

A’s duty to drive the logs is discharged, and A is not liable to B for breach of contract. Restatement 2d of Contracts § 263(b)

Question 32

A, a farmer, contracts with B in the spring to sell a large quantity of beans to B during the following season. Although the contract does not state where the beans are to be grown, A owns but one tract of land, on which he has in the past raised beans, and both parties understand that the beans will be raised on this tract. A properly plants and cultivates beans on the tract in sufficient quantity to perform the contract, but an extraordinary flood destroys the crop. A delivers no beans to B. Is A’s duty discharged? Is there a breach?

Answer 32

A’s duty to deliver beans is discharged, and A is not liable to B for breach of contract. Compare Illustration 1 to § 263. Illustration 12 to § 261. Restatement 2d of Contracts § 263(b)

Question 33

A, a farmer, contracts with B in the spring to sell a large quantity of beans to B during the following season. Neither does the contract state where the beans are to be grown, nor do A and B have a common understanding as to where the beans will be grown. A properly plants and cultivates beans on the tract in sufficient quantity to perform the contract, but an extraordinary flood destroys the crop. A delivers no beans to B. Is A’s duty discharged? Is there a breach?

Answer 33

A’s duty to deliver beans is not discharged, and A is liable to B for breach of contract. Cf. Comment f to § 261. Restatement 2d of Contracts § 263(b)

Question 34

A sells land to B, who, as part of the contract, promises that the land shall not be built upon. The land is taken by eminent domain under statutory authority and a building is built on it. Is B’s duty discharged? Is there a breach?

Answer 34

B’s duty not to build on the land is discharged, and B is not liable to A for breach of contract. Restatement 2d of Contracts § 264(a)

Question 35

A, a railroad, promises to give B annual passes for life, in consideration for a conveyance of land by B to A. After thirteen years, a statute is enacted forbidding railroads to grant such passes, and A refuses to give further passes to B. Is A’s duty discharged? Is there a breach? What claim, if any, might B have against A?

Answer 35

A’s duty to give passes is discharged, and A is not liable to B for breach of contract. B may have a claim against A under the rule stated in § 272(1). Restatement 2d of Contracts § 264(a)

Question 36

A, a manufacturer of sewage treatment equipment, contracts to design and install a central sewage treatment plant, for which B, a developer of a residential subdivision, contracts to pay. The parties understand that A must obtain the approval of the state Department of Health before installation. A is unable to install the plant because the Department of Health disapproves the plans. How might a court conclude that A’s duty is not discharged and there is a breach?

Answer 36

If the court concludes, on the basis of A’s experience and the absence of any limitation in the contract, that A assumed the risk that approval would be denied, it will decide that A’s duty to install the plant is not discharged and that A is liable to B for breach of contract. Cf. Illustration 3 to § 266. Restatement 2d of Contracts § 264(a)

Question 37

A contracts with B to sell him a specific machine on a stated day, time being of the essence. C, by false allegations of ownership of the machine, induces a court to enjoin A from delivering the machine. In spite of diligent efforts, A is unable to have the injunction dissolved in time to fulfill his contract with B. Is A’s duty discharged? Is there a breach? How could this be otherwise?

Answer 37

A’s duty to deliver the machine is discharged, and A is not liable to B for breach of contract. The result would be different if due to A’s fault C had just grounds for obtaining the injunction, or if A, in breach of his duty of good faith and fair dealing (§ 205), failed to use diligent efforts which could have secured its dissolution. See Comment d to § 261 and Illustration 11 to that section. Restatement 2d of Contracts § 264(a)

Question 38

A and B make a contract under which A is to employ B for a year. B is unable to complete his performance because he is arrested and imprisoned for a burglary that he has committed. Is B’s duty discharged? Is there a breach?

Answer 38

Because his inability was due to his own fault, B’s duty to work for a year is not discharged, and B is liable to A for breach of contract. See Comment d to § 261. Restatement 2d of Contracts § 264(a)

Question 39

A, a citizen of a foreign country, contracts with B to sell him the output of A’s mill for one year. War breaks out, and A’s government orders him to sell the output of his mill to it instead. A complies with the order in good faith and fails to deliver to B. Is A’s duty discharged? Is there a breach? Does this depend on the legal validity of the order?

Answer 39

A’s duty to deliver his output to B is discharged, and A is not liable for breach of contract. The result does not depend on the legal validity of the order. Restatement 2d of Contracts § 264(b)

Question 40

A and B make a contract under which B is to pay A $1,000 and is to have the use of A’s window on January 10 to view a parade that has been scheduled for that day. Because of the illness of an important official, the parade is cancelled. B refuses to use the window or pay the $1,000. Is B’s duty discharged? Is there a breach?

Answer 40

B’s duty to pay $1,000 is discharged, and B is not liable to A for breach of contract. Restatement 2d of Contracts § 265(a)

Question 41

A contracts with B to print an advertisement in a souvenir program of an international yacht race, which has been scheduled by a yacht club, for a price of $10,000. The yacht club cancels the race because of the outbreak of war. A has already printed the programs, but B refuses to pay the $10,000. Is B’s duty discharged? Is there a breach? What claim, if any, might A have against B?

Answer 41

B’s duty to pay $10,000 is discharged, and B is not liable to A for breach of contract. A may have a claim under the rule stated in § 272(1). Restatement 2d of Contracts § 265(a)

Question 42

A, who owns a hotel, and B, who owns a country club, make a contract under which A is to pay $1,000 a month and B is to make the club’s membership privileges available to the guests in A’s hotel free of charge to them. A’s building is destroyed by fire without his fault, and A is unable to remain in the hotel business. A refuses to make further monthly payments. Is A’s duty discharged? Is there a breach?

Answer 42

A’s duty to make monthly payments is discharged, and A is not liable to B for breach of contract. Restatement 2d of Contracts § 265(a)

Question 43

A leases neon sign installations to B for three years to advertise and illuminate B’s place of business. After one year, a government regulation prohibits the lighting of such signs. B refuses to make further payments of rent. Is B’s duty discharged? Is there a breach?

Answer 43

B’s duty to pay rent is discharged, and B is not liable to A for breach of contract. See Illustration 7 of § 265. Restatement 2d of Contracts § 265(a)

Question 44

A contracts to sell and B to buy a machine, to be delivered to B in the United States. B, as A knows, intends to export the machine to a particular country for resale. Before delivery to B, a government regulation prohibits export of the machine to that country. B refuses to take or pay for the machine. Is B’s duty discharged? Is there a breach? Why?

Answer 44

If B can reasonably make other disposition of the machine, even though at some loss, his principal purpose of putting the machine to commercial use is not substantially frustrated. B’s duty to take and pay for the machine is not discharged, and B is liable to A for breach of contract. Restatement 2d of Contracts § 265(a)

Question 45

A leases a gasoline station to B. A change in traffic regulations so reduces B’s business that he is unable to operate the station except at a substantial loss. B refuses to make further payments of rent. Is B’s duty discharged? Is there a breach? Why?

Answer 45

If B can still operate the station, even though at such a loss, his principal purpose of operating a gasoline station is not substantially frustrated. B’s duty to pay rent is not discharged, and B is liable to A for breach of contract. The result would be the same if substantial loss were caused instead by a government regulation rationing gasoline or a termination of the franchise under which B obtained gasoline. Restatement 2d of Contracts § 265(a)

Question 46

A leases neon sign installations to B for three years to advertise and illuminate B’s place of business. After one year, a government regulation prohibits the lighting of such signs. The government regulation provides for a procedure under which B can apply for an exemption, but B, in breach of his duty of good faith and fair dealing (§ 205), fails to make such an application. Is B’s duty discharged? Is there a breach?

Answer 46

Unless it is found that such an application would have been unsuccessful, B’s duty to pay rent is not discharged, and B is liable to A for breach of contract. Cf. Illustration 11 to § 261. Illustration 3 to § 264. Restatement 2d of Contracts § 265(b)

Question 47

A contracts to sell a specified machine to B for $10,000. At the time the contract is made, the machine has been destroyed by fire without A’s fault but A has no reason to know this. Does A have a duty? Is there a breach?

Answer 47

Under the rule stated in § 266(1) no duty arose under which A is to deliver the machine, and A is not liable to B for breach of contract. Cf. Illustration 7 to § 266 and Illustration 5 to § 263. Restatement 2d of Contracts § 266(a)

Question 48

A and B make a contract under which A is to sell B a house. B, an experienced real estate dealer, insists on the inclusion of a provision under which A is to procure a permit for its conversion into a two family dwelling. Two days earlier, a local zoning ordinance was enacted prohibiting such a conversion, but A has no reason to know this. A is unable to procure the permit. Does A have a duty? Is there a breach?

Answer 48

Under the rule stated in § 266(1), no duty arose under which A is to procure the permit, and A is not liable to B for breach of contract. See § 264. Restatement 2d of Contracts § 266(a)

Question 49

A, in public bidding, is awarded a contract to build a hospital for the State. A makes a subcontract with B for the installation of glass. Before B begins performance, a court declares the contract between A and the State to be invalid because of departures, of which A had no reason to know, from administrative procedure required for public bidding. A notifies B that he will be unable to perform his contract with B. Does A have a duty? Is there a breach? What claim, if any, might B have against A?

Answer 49

Under the rule stated in § 266(1), no duty arose under which A is to perform his contract with B, and A is not liable to B for breach of contract. See § 264. Cf. Illustration 3 to § 264. B may have a claim against A under the rule stated in § 272(1). Restatement 2d of Contracts § 266(a)

Question 50

A, an engineering firm, contracts with B to lay water mains under a river. After diligent effort, A is unable to do the work, although other, more experienced firms could do it. Performance is not impracticable. Does A have a duty? Is there a breach?

Answer 50

A is under a duty to lay the mains, and A is liable to B for breach of contract. See Comment e to § 261. Restatement 2d of Contracts § 266(a)

Question 51

A, an owner of land, and B, a builder, make a contract under which B is to take from A’s land, at a stated rate per cubic yard, all the gravel and earth necessary for the construction of a bridge, an amount estimated to be 114,000 cubic yards. Much of the gravel and earth is below water level and cannot be removed by ordinary means, so that removal would require the use of special equipment at ten times the usual cost per cubic yard, but B has no reason to know this. After removing 50,000 yards, B discovers that this is the case for the remaining gravel and earth, and refuses to take or pay for it. Does B have a duty? Is there a breach? What claim, if any, might A have against B?

Answer 51

Under the rule stated in § 266(1), no duty arose under which B is to take or pay for the gravel, and B is not liable to A for breach of contract. A may have a claim against B under the rule stated in § 272(1). Restatement 2d of Contracts § 266(a)

Question 52

A contracts to sell land to B for B’s use as a health resort and milk farm. Two days earlier, a local zoning ordinance was enacted forbidding its use for this purpose, but B has no reason to know this. On discovery of the ordinance, B refuses to take or pay for the land. Does B have a duty? Is there a breach?

Answer 52

Under the rule stated in § 266(2), no duty arose under which B is to take or pay for the land, and B is not liable to A for breach of contract. Restatement 2d of Contracts § 266(a)

Question 53

A contracts to sell a specified machine to B for $10,000, warranting its merchantability. At the time the contract is made, the machine is not merchantable because of an uncurable defect not due to the fault of A, but A has no reason to know this. Does A have a duty? Is there a breach?

Answer 53

Because of A’s warranty, he is under a duty to deliver a merchantable machine in spite of the impracticability of doing so, and A is liable to B for breach of contract. Restatement 2d of Contracts § 266(b)

Question 54

A contracts with B to build a house on B’s land according to plans furnished by A. Because of subsoil conditions, of which A has no reason to know, this cannot be done unless the land is drained at great expense. After the house is partly completed, it collapses because of these conditions, and A refuses to continue the work. How would a court determine as to whether A has a duty and if there is a breach?

Answer 54

The court may determine from all the circumstances, including the fact that A furnished the plans, that A is under a duty to build the house in spite of the impracticability of doing so, and that A is liable to B for breach of contract. Compare Illustration 4 to § 263. Restatement 2d of Contracts § 266(b)

Question 55

A contracts with B to develop, manufacture, and deliver a light weight electronic device according to A’s own specifications by means of what both A and B understand will be a revolutionary technological breakthrough. No breakthrough occurs, and A is unable to deliver the device because it is not possible for any manufacturer, under the state of the art, to keep the weight within the contract specifications. How would a court determine as to whether A has a duty and if there is a breach?

Answer 55

The court may determine from all the circumstances, including the facts that A furnished the specifications and that the parties understand that A will achieve a breakthrough, that A is under a duty to deliver the device in spite of the impracticability of doing so, and that A is liable to B for breach of contract. Restatement 2d of Contracts § 266(b)

Question 56

A contracts with B to manufacture and deliver a light weight electronic device according to specifications furnished by B’s engineers. It is not possible for any manufacturer to keep the weight within the contract specifications, but A has no reason to know this. A does not deliver the device. How would a court determine as to whether A has a duty and if there is a breach?

Answer 56

The court may determine from all the circumstances, including the fact that B furnished the specifications, that A is under no duty to deliver the device because of the impracticability of doing so and that A is not liable to B for breach of contract. Restatement 2d of Contracts § 266(b)

Question 57

A contracts with B to paint a continuous mural around a room in B’s house for $10,000. A dies after he has finished three of the four walls, and B refuses to pay A’s estate anything. Does A have a duty? What claim, if any, might A’s estate have against B?

Answer 57

Although A’s duty as to the fourth wall has been discharged, with the result that his performance never became due, his failure to render it nevertheless may affect B’s duty under the rule stated in § 237. Since his failure was material and cannot be cured, A’s estate has no claim under the contract for the three painted walls. The estate may have a claim under the rule stated in § 272(1). Restatement 2d of Contracts § 267(a)

Question 58

A, a school teacher, contracts with B to teach in B’s school for a year. A is to work from September through May, with June, July and August as vacation, during which A’s duties are insignificant. B is to pay A monthly from September through August. A dies at the beginning of June, and B refuses to pay A’s salary for June, July or August. Does A have a duty? What claim, if any, might A’s estate have against B?

Answer 58

A’s estate has a claim against B under the contract for the salary for those three months. Although A’s duty as to the last three months has been discharged with the result that his performance as to those months never became due, his failure to render performance nevertheless may affect B’s duty under the rule stated in § 237. But since his failure was not material, A’s estate has a claim against B for the salary for those three months. Restatement 2d of Contracts § 267(a)

Question 59

A contracts with B to furnish bus service to students attending B’s school during the school year, from September through May, for a stated sum payable monthly. In March the school is closed until further notice because of an epidemic. Although the school remains closed during April and May, A is required under the contract to remain ready to resume performance. B refuses to pay A for April and May. Does B have a duty? What claim, if any, might A have against B?

Answer 59

Since in the circumstances, including the requirement that A remain ready to resume performance, B assumed the risk that he would have to perform in spite of such non-performance by A, the rule stated in § 267(1) does not apply and A’s failure to render performance does not affect B’s duty under the rule stated in § 237. A has a claim against B under the contract for the monthly sums for April and May. Restatement 2d of Contracts § 267(b)

Question 60

A, who is not a merchant, contracts to sell a specified machine to B for $10,000 on 30 days credit. Before A tenders the machine to B, a fire destroys it without A’s fault. Does B have a duty? What claim, if any, might A have against B?

Answer 60

Under Uniform Commercial Code § 2-509(3), risk of loss does not pass to the buyer until tender if the seller is not a merchant. Since the risk of loss did not pass to B until tender, the rule stated in § 267(1) applies and A’s failure of performance may affect B’s duty under the rule stated in § 237. Since his failure was material and cannot be cured, A has no claim against B under the contract. Compare Illustration 5 to § 263. Restatement 2d of Contracts § 267(b)

Question 61

A, who is not a merchant, contracts to sell a specified machine to B for $10,000 on 30 days credit. The machine is destroyed by fire––without A’s fault––after A tenders it to B, but before B receives it. Does B have a duty? What claim, if any, might A have against B?

Answer 61

Under Uniform Commercial Code § 2-509(3), risk of loss does not pass to the buyer until tender if the seller is not a merchant. Since the risk of loss passed to B on tender, the rule stated in § 267(1) does not apply, and A’s failure to render performance does not affect B’s duty under the rule stated in § 237. A has a claim against B under the contract, even though B does not receive the machine. Restatement 2d of Contracts § 267(b)

Question 62

A contracts to sell a house to B for $50,000 in a state having the Uniform Vendor and Purchaser Risk Act. Under the Act, risk of loss does not pass to the buyer until there has been a transfer of either legal title or possession. Before A has transferred either the legal title to or the possession of the house to B, a fire destroys it without A’s fault. Does B have a duty? What claim, if any, might A have against B?

Answer 62

Since the risk of loss did not pass to B until transfer of title or possession, the rule stated in § 267(1) applies, and A’s failure to offer performance may affect B’s duty under the rule stated in § 238. Since his failure was material and cannot be cured, A has no claim under the contract against B. Restatement 2d of Contracts § 267(b)

Question 63

A contracts to sell a house to B for $50,000 in a state having the Uniform Vendor and Purchaser Risk Act. Under the Act, risk of loss does not pass to the buyer until there has been a transfer of either legal title or possession. The house is destroyed by fire––without B’s fault––after B has taken possession but before title has been transferred. Does B have a duty? What claim, if any, might A have against B?

Answer 63

Since the risk of loss passed to B on transfer of possession, the rule stated in § 267(1) does not apply, and A’s failure to offer performance does not affect B’s duty under the rule stated in § 238. A has a claim against B for $50,000, even though B does not receive title to the house. Restatement 2d of Contracts § 267(b)

Question 64

A, an impresario, contracts with B, a singer, for an engagement for three months beginning on January 1. On the preceding November 30, B contracts pneumonia, and states to A that he will be unable to sing before February 1. A employs another singer to fill B’s place. On January 1, B, having recovered, offers to perform but A refuses. Is A’s duty discharged? Is there a breach?

Answer 64

Since B’s statement would have been a repudiation under the rule stated in § 250 but for the operation of the rules on impracticability of performance stated in §§ 261 and 262, A’s duty to employ B is discharged, and A is not liable to B for breach of contract. Cf. Illustration 2 to § 242. Restatement 2d of Contracts § 268(b)

Question 65

A, an impresario, contracts with B, a singer, for an engagement for three months beginning on January 1. On the preceding November 30, B contracts pneumonia, and A is advised by competent medical authority that B will not be able to sing before February 1. A reasonably demands assurances of due performance by B. B ignores the demand, and A employs another singer to fill B’s place. On January 1, B, having recovered, offers to perform, but A refuses. Is A’s duty discharged? Is there a breach?

Answer 65

Since B’s failure to furnish assurance of due performance would have been a repudiation under the rule stated in § 251 but for the operation of the rules on impracticability of performance stated in §§ 261 and 262, A’s duty to employ B is discharged, and A is not liable to B for breach of contract. Restatement 2d of Contracts § 268(c)

Question 66

A contracts to sell land to B, title to be conveyed one year from the date of the contract. B then learns from reliable sources that the state plans to condemn the land for a highway before that time and reasonably demands assurance of due performance by A. A ignores the demand, and B acquires other land as a substitute for that which A contracted to convey. The state then abandons its plans to build the highway and A tenders the deed one year from the date of the contract. B refuses to perform. Is B’s duty discharged? Is there a breach?

Answer 66

Since A’s failure to furnish assurance of due performance would have been a repudiation under the rule stated in § 251 but for the operation of the rules on impracticability of performance stated in §§ 261 and 264, B’s duty to take and pay for the land is discharged, and B is not liable to A for breach of contract. Restatement 2d of Contracts § 268(c)

Question 67

A contracts with B to build an electric power plant, completion to be within two years, for $10,000,000. Before the commencement of performance, a shortage of materials due to a sudden outbreak of war makes it temporarily impracticable for A to perform. Is A’s duty discharged? What about B? Is there a breach?

Answer 67

A’s duty is suspended until it is no longer impracticable for him to obtain materials, and he is then under a duty to perform with an appropriate extension of time, unless B’s duty to pay is discharged by the delay under the rules stated in §§ 237 and 267. However, if circumstances including increased prices then make it materially more burdensome for A to perform, A’s duty to build the plant is discharged regardless of whether B’s duty would otherwise be discharged by the delay. Restatement 2d of Contracts § 269(a)

Question 68

On July 5, A charters his vessel to B for a voyage from New York to Liverpool, contracting that the vessel shall be ready for loading July 10. On July 8, the government requisitions the vessel for the stated period of a week, returning the vessel to A in New York on July 15. Is A’s duty discharged? What about B? Is there a breach?

Answer 68

A’s duty to have the vessel ready is suspended until July 15 and he is then under a duty to perform with an appropriate extension of time, unless B’s duty to pay is then discharged by the delay under the rules stated in §§ 237 and 267. However, if circumstances including his other contracts then make it materially more burdensome for A to perform, A’s duty is discharged regardless of whether B’s duty would otherwise be discharged by the delay. Restatement 2d of Contracts § 269(a)

Question 69

A contracts to build a supermarket for B for $250,000. Included in the plans are numerous lighted signs, including one next to an adjacent highway. Before A begins performance, a local ordinance prohibits the installation of this sign. Is A’s duty discharged? What about B? What claim, if any, might B have against A?

Answer 69

Since A’s failure to install it would not be material, his performance would be substantial, and A’s duty to build the rest of the supermarket is unaffected. B is still under a duty to pay $250,000, subject to a claim under the rule stated in § 272(1) based on A’s failure to build the sign for which he has been paid. Restatement 2d of Contracts § 270(b)

Question 70

A contracts with B to deliver all of B’s requirements of milk during the following year at B’s loading platform at 200 Lincoln Street. Before A begins performance, the loading platform is accidentally destroyed by fire, but B has an equally suitable platform across the street at 201 Lincoln Street. Is A’s duty discharged? What about B?

Answer 70

Neither A’s nor B’s duties are affected, except that A is to deliver and B is to accept milk at 201 Lincoln Street. Restatement 2d of Contracts § 270(b)

Question 71

A contracts to sell and B to buy a quantity of wheat “f.o.b. Kosmos Steamer at Seattle.” Before delivery, an outbreak of war makes Kosmos line ships unavailable at Seattle, but delivery on that line’s loading dock remains possible and is a commercially reasonable substitute. Is A’s duty discharged? What about B? What claim, if any, might B have against A?

Answer 71

Neither A’s nor B’s duties are affected, except that A is to deliver and B is to accept wheat at the Kosmos line’s loading dock. B may have a claim under the rules stated in § 272(1) based on A’s failure to load the wheat for which he has been paid. Restatement 2d of Contracts § 270(b)

Question 72

A contracts with B to service seven different areas at B’s airport for a lump sum. Before performance is to begin, a government regulation forbids the servicing of one of the areas, discharging A’s duty as to that area under the rules stated in §§ 261 and 264. Is B’s duty discharged? What might B do that would still entail A having a duty to service the other six areas?

Answer 72

Under § 267(1), A’s non-performance would operate as a failure of performance for the purpose of the rule stated in § 237, and B’s remaining duties would be discharged. If, however, B within a reasonable time agrees to pay A the lump sum in full, B’s remaining duties are not discharged and A’s duty to service the other six areas is unaffected. Restatement 2d of Contracts § 270(c)

Question 73

A contracts with B to repair B’s building for $20,000, payment to be made “on the satisfaction of C, B’s architect, and the issuance of his certificate.” A properly makes the repairs, but C dies before he is able to give a certificate. What claim, if any, does A have against B?

Answer 73

Since presentation of the architect’s certificate is not a material part of the agreed exchange and forfeiture would otherwise result, the occurrence of the condition is excused, and A has a claim against B for $20,000. Cf. Illustration 3 to § 225. Restatement 2d of Contracts § 271(a)

Question 74

A, an insurance company, issues to B a policy of accidental injury insurance which provides that notice within 14 days of an accident is a condition of A’s duty. B is injured as a result of an accident covered by the policy but is so mentally deranged that he is unable to give notice for 20 days. B gives notice as soon as he is able. What claim, if any, does B have against A?

Answer 74

Since the giving of notice within 14 days is not a material part of the agreed exchange, and forfeiture would otherwise result, the non-occurrence of the condition is excused and B has a claim against A under the policy. Restatement 2d of Contracts § 271(a)

Question 75

A, an insurance company, issues to B a policy of whole life insurance making it a condition of A’s duty that premiums be paid annually. B is imprisoned in a foreign country for five years, and is unable to pay the premiums during that time. On his release, he tenders the overdue premiums, but A refuses to accept them. What claim, if any, does B have against A?

Answer 75

Since the annual payment of premiums is a material part of the agreed exchange, its non-occurrence is not excused because of impracticability even though forfeiture will result. B has no claim against A. Restatement 2d of Contracts § 271(b)

Question 76

A contracts with B to work for him for one year for $60,000. Illness prevents A from working for the first eleven months, and he refuses to work for the twelfth month although B manifests his assent to paying him $5,000. Is A’s duty discharged? How might there be a breach as based on a court’s decision?

Answer 76

Under the rule stated in § 270, only a manifestation of assent to payment of $60,000, B’s remaining performance in full, would prevent the discharge of A’s duty to work for the twelfth month. If, however, the court decides that this rule will not avoid injustice, it may supply a term, if reasonable, under which A is to work for the twelfth month in return for B’s payment of $5,000. A would then be liable to B for breach of contract. Restatement 2d of Contracts § 272(c)

Question 77

A contracts with B to service seven different areas at B’s airport at prices that are stated separately for each area. Before performance is to begin, a government regulation forbids the servicing of one of the areas. A does not service that area, but offers to service the other six areas in return for the stated prices. B refuses to allow A to do so. Is B’s duty discharged? How might there be a breach as based on a court’s decision?

Answer 77

Under § 267(1), A’s non-performance would operate as a failure of performance for the purpose of the rule stated in § 237, and B’s remaining duties would be discharged. If, however, the court decides that this rule will not avoid injustice, it may supply a term, if reasonable, under which B is to accept A’s servicing of the other areas and pay the stated prices. B would then be liable to A for breach of contract. Restatement 2d of Contracts § 272(c)

Question 78

A contracts to sell and B to buy A’s accounting business for a specified sum. A agrees to remain active in the business for two years during which B agrees to pay A an additional specified sum. After transferring the business to B and receiving a down payment, A dies. B offers to transfer the business to A’s estate, refuses to pay the balance due, and demands the return of his down payment. Is B’s duty discharged? How might there be a breach as based on a court’s decision?

Answer 78

Under the rule stated in § 267(1), not remaining active in the business would operate as a failure of performance for the purpose of the rule stated in § 237, and B’s remaining duties would be discharged. If, however, the court decides that this rule will not avoid injustice, it may supply a term, if reasonable, under which B is to keep and pay for the business, but both parties’ duties with respect to the two-year period are discharged. B would then be liable to A’s estate for breach of contract. Restatement 2d of Contracts § 272(c)

Question 79

A, an inventor, makes a contract with B, a manufacturer of washing machines, giving B the exclusive right to use a transmission on which A holds a patent that has 14 years to run. In return, B agrees to pay A royalties, the minimum annual payment to be $10,000. As the result of an outbreak of war, the government prohibits the manufacture of washing machines for a two-year period, frustrating B’s purpose during that time. When B refuses to pay royalties for the two-year period, A notifies B that B no longer has the exclusive right to the transmission. Is A’s duty discharged? How might there be a breach as based on a court’s decision?

Answer 79

Under the rule stated in § 269, B’s duty is suspended until the manufacture of washing machines is no longer prohibited, and if circumstances, including other contractual commitments, do not make it materially more burdensome for B to perform after the suspension of payments, B’s duty to pay is not thereby discharged. Nevertheless, under § 267(1), a failure by B to pay royalties for a period of two years would operate as a failure of performance for the purpose of the rule stated in § 237, and A’s remaining duties would be discharged. If, however, the court decides that this rule will not avoid injustice, it may supply a term, if reasonable, under which A is to give B the exclusive right to use his patented transmission for the remainder of the life of the patent, after the two-year period, in return for B’s payment of the agreed royalties during that time. A would then be liable to B for breach of contract. Restatement 2d of Contracts § 272(c)

Question 80

By two separate contracts, A agrees to sell and B and C to buy identical quantities of peaches grown in A’s orchard. Although A has no contract with D, he regularly sells D the same quantity. An unusual drought prevents A from growing more than one third the total amount required by B, C and D. A delivers all of the peaches to D, although both B and C manifest assent to paying A for what he can deliver. What would the court determine regarding the peaches?

Answer 80

Because the rules stated in §§ 261–272 will not avoid injustice, the court will, under Uniform Commercial Code § 2-615(b), supply a term under which A must allocate the peaches fairly and reasonably between B and C but may at his option include his regular customer D. A is liable to B and C for breach of contract for failure so to allocate the peaches. Restatement 2d of Contracts § 272(c)

Question 81

A, the owner of an opera company that is heavily in debt, transfers half of its stock to B, who promises to manage the company. B is to have the right to sell the stock only if through his management the debt is paid off. After seven years, during which B is able to pay off only 15 per cent of the debt, the opera house is accidentally destroyed by fire. The insurance proceeds are used to pay off the debt, leaving a balance in the treasury, and the opera house is not rebuilt, preventing the occurrence of the condition of B’s right to sell his stock. A seeks an accounting for the stock transferred to B. How might the court decide regarding whether or not B is entitle to compensation for his services?

Answer 81

Under the rule stated in § 271, the non-occurrence of the condition is not excused because its occurrence is a material part of the agreed exchange. If, however, the court decides that this rule will not avoid injustice, it may supply a term, under which B is entitled to a reasonable compensation for his services, giving due regard to the terms of the contract. Restatement 2d of Contracts § 272(c)