Sales and Leases | 174
mentioned, in a fixed-price contract, the seller normally assumes the risk of cost increases. In that vein, the seller is generally presumed to assume the risk of any contingency that was foreseeable at the time of contracting. [ See 2 Hawkland UCC Series § 2-615:2, Westlaw (database updated June 2021) and cases cited.] 3. Whether a Contingency Has Rendered the Seller’s Performance Impracticable Impracticability, as used in § 2-615, does not require literal impossibility of performance. Rather, performance becomes impracticable if it would involve “extreme and unreasonable difficulty, expense, injury[,] or loss.” [ See Encore Glass, Inc. v. Anchor Glass Container Corp. (In re Anchor Glass Container Corp.) , 345 B.R. 765 (M.D. Fla. 2006) (internal cites/quotes omitted).] A mere increase in the cost of producing or obtaining the goods, even a large increase, does not normally render performance impracticable. After all, once again, the seller assumes that risk by entering a fixed-price contract. But a cost increase may suffice if it is so outlandishly large that it fundamentally alters the nature of the seller’s performance, such that forcing the seller to perform under the circumstances would be unjust. [ See 2 Hawkland UCC Series § 2-615:2, Westlaw (database updated June 2021). See Moyer v. City of Little Falls , 510 N.Y.S.2d 813 (N.Y. Sup. Ct. 1986) (applying Article 2 by analogy to a services contract).] Note : In a given case, it can be extremely difficult to predict whether a court or jury will find that the relevant contingency rendered the seller’s performance impracticable. The decisions on the subject are, perhaps to put it mildly, not entirely consistent. [ See 2 Hawkland UCC Series § 2-615:2, Westlaw (database updated June 2021).] a. Objective v. Subjective Impracticability Section 2-615 is concerned with objective impracticability, not subjective impracticability. That is, impracticability is determined without regard to the specific seller’s financial ability. For instance, a large, multinational conglomerate with billions of dollars in assets may well be able, practically speaking, to render performance easily, even if it would impose extreme, unreasonable, and unforeseeable cost or difficulty. But the point of § 2-615 is that no seller, regardless of financial ability, should have to perform (at least, not completely) if it would impose extreme, unreasonable, and unforeseeable cost or difficulty. Yet this rule cuts both ways. The mere fact that performance has become subjectively impracticable for the specific seller is not enough, by itself, to invoke § 2-615. Rather, performance must be objectively impracticable, considering the contractual risks the seller assumed and what was foreseeable at the time of contracting. [ See 2 Hawkland UCC Series § 2-615:2, Westlaw (database updated June 2021); Clark v. Wallace County Co-op Equity Exchange , 986 P.2d 391 (Kan. App. Ct. 1999).]
Made with FlippingBook - Online Brochure Maker