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Unformatted text preview: The answer is no.
Changes in market price are usually
foreseeable, and the reason a company
such as Alpha wants to make a two-year
contract is to lock in their costs for that
period of time.
But sometimes the costs and difficulty
are extreme, and the unforeseen event
is something more drastic. Consider the
following: Jeff Roberson/Associated Press rog80328_06_c06_111-133.indd 121 10/26/12 5:37 PM Section 6.2 Performance and Discharge of Contracts CHAPTER 6 Example 6.13. Albert contracts with Natasha to excavate a foundation for
a new home on his land for $1,000. Both Natasha and Albert assume that
his land consists of sandy soil, as is common in his area. In fact, Albert’s
land contains only two feet of sandy topsoil over several hundred feet of
solid rock. In order to excavate the foundation to the agreed-upon depth of
ten feet, Natasha would have to blast through solid rock at an expense to
her of tens of thousands of dollars. Since the cost involved in completing
this contract is much greater than anticipated by both parties, and since the
unusual geology in the land was not foreseeable at the time that the contract was entered into, this contract would be discharged as commercially
impracticable by many courts.
The elements of unforeseeability of the special circumstances and unreasonable expense
are crucial to a case in which one of the parties is seeking to have the contract discharged
for commercial impracticability. Merely that the contract will be more costly than anticipated is not enough; nor will extreme cost be the basis for discharging a contract where the
parties could have found out the special circumstances through a reasonable inspection. Frustration of Purpose
There are instances in which an unforeseeable event takes place after parties enter into a
valid contract but before performance is rendered (e.g., while the contract is still executory) that destroys the purpose of the contract. Under such circumstances, the parties are
able to perform, but performance would be pointless and wasteful. Under such circumstances,...
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- Spring '10
- Business Law