Except so far as a seller may have assumed a greater obligation and subject to Code Section 11-2-614 on substituted performance:
(Code 1933, § 109A-2 - 615, enacted by Ga. L. 1962, p. 156, § 1.)
Law reviews.- For article discussing the anachronistic nature of the Georgia contracts Code as dramatized by comparing the doctrine of consideration as it is formulated in the restatements of contracts and in former Title 20 of the Georgia Code of 1933, and the interpretative approach Georgia courts have taken in dealing with such Code, see 13 Ga. L. Rev. 449 (1979). For article, "Impracticability As Risk Allocation: The Effect of Changed Circumstances upon Contract Obligations for the Sale of Goods," see 22 Ga. L. Rev. 503 (1988). For article, "The Future Use of Unconscionability and Impracticability as Contract Doctrines," see 40 Mercer L. Rev. 937 (1989).
JUDICIAL DECISIONSANALYSIS
General Consideration
Wide and flexible application intended.
- No exact definition of range of excusing contingencies is possible, O.C.G.A. § 11-2-615 being intentionally drawn in general terms to permit wide and flexible application. Swift Textiles, Inc. v. Lawson, 135 Ga. App. 799, 219 S.E.2d 167 (1975).
Cited in R.C. Craig, Ltd. v. Ships of Sea, Inc., 345 F. Supp. 1066 (S.D. Ga. 1972); R.C. Craig, Ltd. v. Ships of Sea, Inc., 401 F. Supp. 1051 (S.D. Ga. 1975); Fratelli Gardino v. Caribbean Lumber Co., 587 F.2d 204 (5th Cir. 1979).
Application
Section requires proof of commercial impracticability of performance.
- The Uniform Commercial Code does not require proof of impossibility of performance but merely that of impracticability, which term must be interpreted as commercial impracticability. To that extent the Uniform Commercial Code makes contract less binding on parties by widening grounds for which a seller may be relieved of the seller's obligation. Swift Textiles, Inc. v. Lawson, 135 Ga. App. 799, 219 S.E.2d 167 (1975).
Standard by which impracticability should be judged is an objective one. Under this objective standard, the focus of the impracticability analysis is upon the nature of the agreement and the expectations of the parties, not to the size and financial ability of the parties. Alimenta (U.S.A.), Inc. v. Cargill, Inc., 861 F.2d 650 (11th Cir. 1988).
Severe shortage of raw materials or supplies due to unforeseen contingency.
- Severe shortage of raw materials or supplies due to contingency such as war, embargo, local crop failure, unforeseen shutdown or major sources of supply, or the like, which either causes a marked increase in cost or altogether prevents seller from securing supplies necessary to performance, is within the contemplation of O.C.G.A. § 11-2-615. Swift Textiles, Inc. v. Lawson, 135 Ga. App. 799, 219 S.E.2d 167 (1975).
Mere unexpected difficulty or unforeseen expense encountered by seller does not excuse seller's performance. Swift Textiles, Inc. v. Lawson, 135 Ga. App. 799, 219 S.E.2d 167 (1975).
Difficulty, inconvenience, or unusual cost in performing, though it may make performance hardship, does not excuse a party from performance of an absolute, unqualified undertaking to do a thing that is possible and lawful. Swift Textiles, Inc. v. Lawson, 135 Ga. App. 799, 219 S.E.2d 167 (1975).
Increased cost alone does not excuse performance unless due to unforeseen contingency which alters essential nature of performance. Swift Textiles, Inc. v. Lawson, 135 Ga. App. 799, 219 S.E.2d 167 (1975).
Rise or collapse in market in itself is not justification for nonperformance, for that is exactly the type of business risk which business contracts made at fixed prices are intended to cover. Swift Textiles, Inc. v. Lawson, 135 Ga. App. 799, 219 S.E.2d 167 (1975).
Unforeseeable drought.- Seller was entitled to be excused from performing contracts for the sale of peanuts because such performance had become commercially impractical due to the occurrence of a drought whose effects were not foreseeable when the contracts had been made. Alimenta (U.S.A.), Inc. v. Gibbs Nathaniel (Can.) Ltd., 802 F.2d 1362 (11th Cir. 1986).
Section not applicable to noncommercial goods sales contract.
- Trial court did not err in awarding summary judgment to the State Medical Education Board, making a student liable for both the amount of the scholarship received and attorney's fees, as: (1) estoppels were unfavored under Georgia law; (2) the student came forward with no more than hearsay to support a claim that oral misrepresentations of fact were made regarding said scholarship; (3) the contract was not rescinded by either party; (4) no mutual mistake of fact was found; and (5) any impossibility in performing the contract was personal to the student. Moreover, the defense under O.C.G.A. § 11-2-615 did not apply. Calabro v. State Med. Educ. Bd., 283 Ga. App. 113, 640 S.E.2d 581 (2006).
Defense of impracticability contemplates impracticability of performance by seller of commercial goods, and therefore unavailable to those not in business of selling commercial goods.
- Defendants in a contract dispute could not defend their failure to continue to honor merchant referral requirements in the parties' contract on the ground that performance was impracticable under O.C.G.A. § 11-2-615 because the defense of impracticability contemplates the impracticability of performance by a seller of commercial goods and defendants were not in the business of selling commercial goods to the plaintiff. Elavon, Inc. v. Wachovia Bank, NA, F. Supp. 2d (N.D. Ga. May 23, 2011).
Allocation
"Fair and reasonable".
- The language "fair and reasonable" in O.C.G.A. § 11-2-615(b) means that amount allocated must be fair and reasonable, and price charged for amount allocated must be in accordance with provisions of the contract. Mansfield Propane Gas Co. v. Folger Gas Co., 231 Ga. 868, 204 S.E.2d 625 (1974).
Seller's Assumption of Greater Liability
O.C.G.A. § 11-2-615 will not apply where seller has assumed a greater obligation, which occurs when a contract contains an affirmative provision that seller will perform contract even though contingencies might occur. Gold Kist, Inc. v. Stokes, 138 Ga. App. 482, 226 S.E.2d 268 (1976).
Parties, by terms of contract, may impose greater obligation upon seller.
- O.C.G.A. § 11-2-615 expressly recognizes right to impose, by terms of contract, a higher standard upon seller, with result that parties may restrict excusing contingencies to those specified in the contract or may eliminate protection given by O.C.G.A. § 11-2-615 by imposing upon seller an absolute contractual duty to make delivery. Swift Textiles, Inc. v. Lawson, 135 Ga. App. 799, 219 S.E.2d 167 (1975).
Affirmative provision in contract required.
- For there to be exception to and exemption from rule of allocation applicable to contract of sale, such contract must contain affirmative provision that seller will perform contract even though contingencies which permit allocation might occur. Mansfield Propane Gas Co. v. Folger Gas Co., 231 Ga. 868, 204 S.E.2d 625 (1974).
Agreement to pay damages if event making performance impossible occurs.
- An affirmative provision in contract that seller agrees to pay stipulated damages upon occurrence of an event making performance impossible necessarily implies that a breach of contract under those conditions is conceded, and places upon seller a greater obligation than might otherwise exist. Gold Kist, Inc. v. Stokes, 138 Ga. App. 482, 226 S.E.2d 268 (1976).
Question of fact may arise as to whether nonoccurrence of given contingency was a basic assumption, and fact that the contingency was contemplated by parties indicates either that seller assumed liability therefor or that by definition it was not an excusing contingency within O.C.G.A. § 11-2-615. Swift Textiles, Inc. v. Lawson, 135 Ga. App. 799, 219 S.E.2d 167 (1975).
RESEARCH REFERENCES
Am. Jur. 2d.
- 67 Am. Jur. 2d, Sales, §§ 591-606.
6 Am. Jur. Pleading and Practice Forms, Commercial Code, § 2:630.
U.L.A.- Uniform Commercial Code (U.L.A.) § 2-615.
ALR.
- Destruction or loss of specific property which is the subject or basis of a contract, after the inception of the contract, as excuse for nonperformance, 12 A.L.R. 1273; 74 A.L.R. 1289.
Meaning of words "commercially impracticable" in contract of sale, 38 A.L.R. 215.
Express provisions in contract of sale, or for supply of a commodity, for relief from the obligation in certain event, 51 A.L.R. 990.
Pro rata distribution by seller to buyers, 74 A.L.R. 995.
Destruction or loss of specific property which is the subject or basis of a contract, after the inception of the contract, as excuse for nonperformance, 74 A.L.R. 1289.
Inability of a seller of a commodity manufactured or produced by a third person to obtain the same from the latter as a defense to an action by the buyer for breach of the contract, 80 A.L.R. 1177.
Insolvency of insurer as affecting liability of one under duty by statute or contract to carry or maintain insurance for another's protection, 106 A.L.R. 248.
Rights of parties to contract the performance of which is interfered with or prevented by war conditions or acts of government in prosecution of war, 137 A.L.R. 1199; 147 A.L.R. 1273; 148 A.L.R. 1382; 149 A.L.R. 1447; 150 A.L.R. 1413; 151 A.L.R. 1447; 152 A.L.R. 1447; 153 A.L.R. 1417; 154 A.L.R. 1445; 155 A.L.R. 1447; 156 A.L.R. 1446; 157 A.L.R. 1446; 158 A.L.R. 1446.
Impracticability of performance of sales contract under UCC § 2-615, 55 A.L.R.5th 1.