LEGAL EXCUSE FOR BREACH OF CONTRACT

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From a legal perspective, the mere existence of the legal elements for a breach of contract claim (e.g., a failure to perform) are not necessarily sufficient to definitively succeed in one's claim. There are certain circumstances that can serve as a valid legal excuse for non-performance. When a party can successfully invoke one of these excuses (based on an application of the facts to the relevant judicial precedent), they may be discharged from their contractual obligations without being held liable for damages. Some of the most common legal excuses for breaching a contract include:

A. Impossibility of Performance

This defense applies when an unforeseen event makes it literally impossible for a party to fulfill their contractual obligations. The key is that the performance must be objectively impossible, not just difficult or more expensive. Examples include:

• Destruction of the Subject Matter: If the specific item necessary for the contract is destroyed without fault of either party (e.g., a building a contractor was hired to renovate burns down), performance is impossible.

• Death or Incapacity: If the contract requires the personal services of a specific individual and that person dies or becomes incapacitated, performance is impossible.

• Supervening Illegality: If a new law or government regulation makes the performance of the contract illegal after the agreement was made, the contract is discharged.

B. Frustration of Purpose

This doctrine is related to impossibility, but with relevant legal differences. Here, the performance of the contract is still technically possible, but the reason for entering into the contract has been destroyed by an unforeseen event. The non-breaching party no longer receives the value they were expecting.

A classic example is the "Coronation Cases" from England. A person rented a room to watch a king's coronation procession, but the king fell ill, and the procession was canceled. The court ruled that although the renter could still use the room, the primary purpose of the contract had been frustrated, and they were not required to pay.

To successfully argue frustration of purpose, you must show (to the satisfaction of the relevant judicial precedent) that:

• The event was unforeseen at the time the contract was made.

• The event completely or substantially destroyed the value of the performance for the party claiming the defense.

• The event was not the fault of the party seeking to be discharged.

C. Force Majeure

This is a contractual clause, not a general legal doctrine, that explicitly outlines events that will excuse a party from performing their obligations. These clauses are common in many business contracts and are designed to address events "beyond the parties' control."

Common events listed in a force majeure clause include:

• "Acts of God" (e.g., floods, earthquakes, hurricanes)

• War, terrorism, or civil unrest

• Strikes or labor disputes

• Epidemics or pandemics

• Government actions or laws

The language of the clause is critical. Courts will interpret these clauses narrowly, and a party seeking to be excused must demonstrate that the specific event is covered by the clause and that it directly prevented their performance.

D. Other Defenses to Contract Formation

These defenses relate to issues that occurred before the contract was even formed, making the contract void or voidable from the beginning. They are not excuses for breaching a valid contract, but rather arguments that a valid contract never existed in the first place.

• Lack of Capacity: A contract can be voided if one of the parties lacked the legal capacity to enter into it (e.g., they were a minor, mentally incompetent, or under the influence of drugs/alcohol).

• Duress: If a party was forced into a contract under a threat of violence or other unlawful pressure, the contract is not enforceable. [more on Duress]

• Undue Influence: This occurs when one person in a position of power or trust (e.g., a caregiver, family member) takes advantage of another to get them to sign a contract [more on Undue Influence].

• Misrepresentation or Fraud: If a party was intentionally lied to or misled about a material fact of the contract, they may be able to void the agreement.

• Mistake: If both parties made a significant mistake about a fundamental aspect of the contract (a "mutual mistake"), the contract may be rescinded. A "unilateral mistake" (only one party was mistaken) is generally not an excuse unless the other party knew about the mistake and took advantage of it.

For knowledgeable and experienced legal representation in negotiating, drafting and reviewing business contracts, and where circumstances warrant, enforcing, or otherwise dealing with interpretation of, contracts, we welcome you to contact our law firm by email at Chris@NeufeldLegal.com or by telephone at 403-400-4092 / 905-616-8864.

 

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