An Economic Analysis of the Impossibility Doctrine
![handle is hein.journals/legstud11 and id is 315 raw text is: AN ECONOMIC ANALYSIS OF THE
IMPOSSIBILITY DOCTRINE
CHRISTOPHER J. BRUCE*
ONE of the primary functions of contract law is the enforcement of
contracts which have been reached in the absence of duress. Yet in some
situations the courts have shown themselves willing to discharge parties
from their contractual obligations. One of the most important of these
situations is dealt with by the doctrine of impossibility. ' According to
this doctrine, failure to fulfill contractual obligations may result in dis-
charge of the contract, rather than breach, if the contract has become
physically impossible to perform-for example, if the individual who was
to have performed the contract has died-or if the cost of carrying out the
contract has risen to such an extent that performance has become
uneconomical-for example, if, after it had burned down, extraordinary
steps were required to reconstruct a factory in time to fulfill a contract.
In a recent paper, Richard A. Posner and Andrew M. Rosenfield2
(henceforth P-R) have argued that . .. the proper criterion for evaluating
the rules of contract law [and, therefore, the doctrine of impossibility] is
... that of economic efficiency. In particular, P-R interpreted this crite-
rion to imply that . . . discharge should be allowed where the promisee is
the superior risk bearer; [whereas] if the promisor is the superior risk
bearer, nonperformance should be treated as a breach of contract. 4
Although I accept the general, economic approach taken by P-R, I feel
* Associate professor of economics, University of Calgary. I would like to thank Richard
Posner, Michael Elliott, and an anonymous referee for their comments on an earlier draft. I
retain responsibility for any remaining errors or omissions.
I I propose to follow Richard A. Posner & Andrew M. Rosenfield, Impossibility and
Related Doctrines in Contract Law: An Economic Analysis, 6 J. Legal Stud. 83 (1977), in
subsuming the doctrines of impracticability and frustration under the heading of im-
possibility.
2 Id.
3 Id. at 89.
I Id. at 90.
[Journal of Legal Studies, vol. XI (June 1982)]
© 1982 by The University of Chicago. All rights reserved. 0047-2530/82/1102-0012$01.50](ViewImageLocal?handle=hein.journals/legstud11&div=19&collection=&method=preview&ext=.png&size=3)
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An Economic Analysis of the Impossibility Doctrine
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