Impracticability Under the U.C.C. for Wartime Contracts

Jennifer S. Martin, University of Pittsburgh School of Law

Abstract

This Article addresses the following question: when should a seller of goods who delays delivery or cancels altogether under a wartime contract be able to claim excuse under U.C.C. Article 2? Failure of delivery or delay due to dangers created by insurgents in Iraq has become common for wartime contractors, and the ground situation for contractors remains unsafe. After presenting representatives factual situations involving well known wartime contractors, the Article describes the typical approach to the excuse question. This approach may deny the seller the right to excuse the failure of delivery in many instances where there the wartime risk might be categorized as foreseeable or is expressly or impliedly allocated to one party. Although this approach works well with a seller faced with a pure monetary loss, it may deprive the wartime seller who is faced with death or serious injury to its employees of a needed contractual “out,” leaving the seller in breach. An alternative framework is needed to allow the seller to excuse delivery in a limited number of wartime circumstances where the seller is faced with death or serious injury.

After describing and critiquing government regulations and the classic impracticability doctrine, the Article lays out a careful contractual analysis of the relationship between the wartime seller and the government buyer. It then proposes a rethinking of the approach to the problem of excusing wartime deliveries—one that would hold sellers to deliver goods in most circumstances during wartime, but would make available to sellers the ability in limited circumstance to excuse contracts during wartime through analysis of functions that are inherently governmental whereby the risk remains with the government. Under this analysis, the risk associated with contingencies where military response is required remains on the Government. The Article concludes with a proposal of the specific balancing of interests that are needed to allow the principles that inform performance and breach under Article 2 to excuse contractors during wartime from performance in cases of extreme hazard.