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69 Minn. L. Rev. 471 (1984-1985)
Winner Take Some: Loss Sharing and Commercial Impracticability

handle is hein.journals/mnlr69 and id is 487 raw text is: Winner Take Some: Loss Sharing and Commercial Impracticability Leon E. Trakman* The increasing invocation of the doctrine of commercial impracticability as an excuse for contract breach raises varied and complex problems of loss allocation. Trained in the formal application of legal doctrine, common law judges historically have refused to spread the burden of a contract discharged be- cause its performance has been rendered commercially imprac- ticable. Notwithstanding the theoretical availability of a broad array of loss-sharing remedies incorporated in the Restatement (Second) of Contracts, and the Uniform Commercial Code,2 ju- dicial adjustment of losses, until very recently, has been the ex- ception, not the rule. Courts are increasingly recognizing, however, that in a commercial environment in which absolute liability for losses is both uneconomical and the source of indi- vidual hardship, loss allocation provides a plausible means of commercially wise and equitable accommodation.3 Yet, despite the historical application of loss splitting by admiralty courts, no consistent methodology has developed to allocate losses in cases of commercial impracticability. This Article traces the evolution of the doctrine of com- mercial impracticability from its beginnings as a rare all-or- nothing remedy to its present status as an embryonic loss-shar- ing doctrine. It then proposes a methodology for the incorpora- * Professor of Law, Dalhousie Law School, Canada. 1. See RESTATEMENT (SECOND) OF CONTRACS §§ 261-72 (1981). 2. See U.C.C. § 2-615 (1978). All references to the Uniform Commercial Code (U.C.C.) are to the 1978 Official Text and Comments, unless otherwise indicated. 3. This is particularly so in relation to long-term contracts in which both parties have reason to continue their relationship despite the intervening dis- ruption. To insist on performance without relief or to excuse performance completely by law may undermine the continuity of the parties' relationship. Cf Speidel, Court-Imposed Price Adjustments under Long-Term Supply Con- tracts, 76 Nw. U.L. REV. 369, 372-75 (1981) (suggesting that long-term contracts should be more readily adjusted). But see Dawson, Judicial Revision of Frus- trated Contacts: The United States, 64 B.U.L. REV. 1 (1984) (courts should not adjust performance obligations under long-term contracts).

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