California First-Year Law Students' Exam (Baby Bar) — MCContractsHard
A buyer and a seller enter into a contract for the sale of 500 units of a specialized component for $50,000. The contract specifies delivery within 60 days. Due to a sudden, unforeseeable embargo imposed by the exporting country, the seller is unable to acquire the necessary raw materials to manufacture the components. Acquiring the materials from an alternative source would increase the cost of production by 500%, making the contract a significant financial loss. The seller seeks to be excused from performance. What is the most likely legal doctrine applicable here?
- AFrustration of purpose.
- BImpossibility of performance.
- CMutual mistake.
- DImpracticability of performance.
Show answer & explanationAnswer & explanation
Correct answer: D. Impracticability of performance.
Impracticability of performance applies when an unforeseen event makes performance extremely and unreasonably difficult or expensive, even if not literally impossible. A 500% increase in cost due to an unforeseeable embargo would likely meet this high standard, excusing the seller's performance.
Why the other options are wrong
- A. Frustration of purpose applies when the *purpose* of the contract for *both* parties is destroyed, not just the difficulty of one party's performance.
- B. Impossibility requires literal inability to perform (e.g., destruction of unique subject matter), which is not the case here as alternative materials exist, albeit at prohibitive cost.
- C. Mutual mistake applies when both parties are mistaken about a basic assumption of fact existing at the time of contract formation, not a future unforeseeable event.
Impracticability of Performance
A doctrine that excuses a party from performance when an unforeseen event makes performance extremely and unreasonably difficult or expensive, even if not literally impossible.
- Event must be unforeseeable at contract formation.
- Performance must be rendered commercially unreasonable or excessively burdensome.
- Distinguished from impossibility (literal inability) and frustration of purpose (destruction of contract's goal).
Memory trick: Impracticability Makes Performance Too Costly, Not Impossible.