Effect on Contracts of War Orders or Other Acts of State

Abstract

It has generally been stated to be the rule that impossibility arising subsequently to the formation of the contract does not excuse a contractor from the usual consequences of non-performance; he must pay damages to the other party. To this rule, however, there are several classes of exceptions: first, where the impossibility is caused by a change in the domestic law; secondly, where the subject-matter of the contract is destroyed; and thirdly, where the impossibility is caused by death or illness of the party bound to perform. As has been asserted in this JOURNAL, these exceptions practically nullify the general rule. It is believed that no case can be found where a promisor has been held to pay damages for failing to perform an act that has become absolutely impossible without any fault of his own. The rule it is believed should be stated to be that a contractor is not excused from performing merely on the ground of increased difficulty or expense.