When Impossibility Discharges Performance

A. Traditional

View Prior to the nineteenth century, courts did not recognize impossibility as an excuse for nonperformance. The rationale was that a contingency could always have been provided for in the contract.

B. Modern View

If subject matter essential to the performance of the contract is destroyed through no fault of the parties, the contract will be discharged.

1. Construction
If a party contracts to construct a building, he is not ordinarily excused from performance if the building is destroyed through no fault of his own. The builder is said to have assumed the risk of any construction problems.

2. Repair
A party that contracts to repair an existing structure is discharged if the structure is destroyed. The structure to have been repaired is considered to be the “essential subject matter of the agreement,” and its existence was a “basic assumption” on which the contract was made.