43. In an action by the performer against the producer for breach of contract, which of the following, if proved, would be the producer's best defense?

The occurrence of an unanticipated or extraordinary event may make contractual duties impossible or impracticable to perform or may frustrate the purpose of the contract. Where the non-occurrence of the event was a basic assumption of the parties in making the contract and neither party expressly or impliedly assumed the risk of the event occurring, the bar exam will use the term «impracticability» to encompass both impossibility and impracticability.

Remember: The promisor's duty to perform serves as a condition precedent to the other party's duty to perform. In other words, if these duties are excused by impossibility, impracticability, or frustration, the other party's contractual duties will also be discharged.

Modern courts will discharge contractual duties where performance has become impracticable. The test for determining impracticability is that the party who is supposed to perform has encountered: (i) extreme and unreasonable difficulty and/or expense; and (ii) its non-occurrence was a basic assumption of the parties when they entered into the contract. In effect, courts will allow the party to avoid performance where subjective impossibility is found. However, a mere change in the degree or difficulty or expense due to certain causes will not be considered impracticable, including increased wages, prices of raw materials, costs of construction (unless well beyond normal). This is because these costs are the types of risks that a fixed-price contract is intended to cover.

Temporary impracticability suspends contractual duties, it does not discharge them. When performance becomes possible again following impracticability, the duty «springs back» into existence. Note, however, that a duty will not spring back into existence if the burden on either party to the contract would be substantially increased or different from that originally contemplated.

B is correct. The producer's best defense against a suit by the performer is that the replacement actor was the only option and would only agree to a contract for the remainder of the tour. This is because these facts would discharge the producer's performance obligations and allowed for the cancellation of the remaining contract with the performer. When the performer became ill, the temporary impracticability doctrine excused her contractual obligation to act in the play, and also gave the producer the right to suspend his performance obligation during the period that the performer's illness prevented her from acting.

When the conditions creating the impracticability were lifted, i.e., the performer could resume her performance, the issue then becomes, how can the producer cancel the remainder of the contract? If the producer had to simply wait to hire a replacement, he would have faced uncertainty around the nature and duration of the performer's illness, which would postpone the tour for an unknown period of time without the ability to make substitute arrangements. If the actor was the only option available as a substitute and unwilling to fill in without a contract for the entire remainder of the tour, then the producer would have had no other option but to cancel the contract with the performer. These facts, when taken together, made it impracticable for the producer to fulfill the remaining performance obligation under the contract with the performer.

A is incorrect. Even if the actor was much better than the performer, this alone would not give the producer the right to cancel the contract. In this scenario, although bringing the performer back to finish the tour may have changed the relative quality of the performance, it would not have been impracticable in a way that would discharge the producer from his remaining contractual obligations.

C is incorrect. These facts would not be the best defense available. The above facts that the actor was the only substitute available and that the actor would only fill in if given the remainder of the tour would allow the producer to cancel the entire contract. A declined offer by the producer for the performer to be the understudy would not allow the producer to then cancel the contract, which would be the best course of action for the producer, as stated above. Any attempt to remedy the situation by hiring the performer as an understudy would be irrelevant.

D is incorrect. These facts, if true, would likely hurt the producer's defense, not help. The doctrine of impracticability relies on the occurrence of unforeseen events. If the producer had reason to believe that the performer would suffer from a stomach disorder that could prevent her from performing, it would not be «unforeseen» or unanticipated.