Printable Format84-2-615. Excuse by failure of presupposed conditions. Except so far as a seller may have assumed a greater obligation and subject to the preceding section on substituted performance:
(a) Delay in delivery or nondelivery in whole or in part by a seller who complies with paragraphs (b) and (c) is not a breach of his duty under a contract for sale if performance as agreed has been made impracticable by the occurrence of a contingency the nonoccurrence of which was a basic assumption on which the contract was made or by compliance in good faith with any applicable foreign or domestic governmental regulation or order whether or not it later proves to be invalid.
(b) Where the causes mentioned in paragraph (a) affect only a part of the seller's capacity to perform, he must allocate production and deliveries among his customers but may at his option include regular customers not then under contract as well as his own requirements for further manufacture. He may so allocate in any manner which is fair and reasonable.
(c) The seller must notify the buyer seasonably that there will be delay or non-delivery and, when allocation is required under paragraph (b), of the estimated quota thus made available for the buyer.
History: L. 1965, ch. 564, ยง 95; January 1, 1966.
KANSAS COMMENT, 1996
1. This section states the doctrine of commercial impracticability, called here "excuse by failure of presupposed conditions." Under this section, the seller's non-performance is excused when performance has been made commercially impracticable either because of an unforeseen contingency that was a basic assumption on which the contract was made or because of compliance in good faith with any applicable governmental order or regulation. Under paragraph (a), performance need not be impossible; it is enough that performance be commercially impracticable. However, a mere shift in market conditions or an increase in the cost of performance, even if substantial, ordinarily will not make performance impracticable. See Official Comments 4 & 5 to this section. A seller also will not be excused under this section if (1) the non-occurrence of the contingency was the seller's fault; (2) the seller had reason to know of the impracticability (i.e., the contingency was foreseeable); or (3) the seller assumed the risk of the contingency. See Sunflower Elec. Coop. v. Tomlinson Oil Co., 7 K.A.2d 131, 638 P.2d 963 (1981), rev. denied, 231 K. 802 (1982).
2. Paragraph (b) defines the seller's duties in cases of partial excuse. Paragraph (c) requires the seller to notify the buyer as a condition of claiming excuse.
3. By its terms, this section applies only to claims of impracticability by sellers. It does not apply to buyers. But see Official Comment 9. Of course, a buyer is more likely to claim as excuse that its purpose in entering into the contract has been frustrated, rather than that its performance (usually payment) is impracticable. Kansas has recognized the doctrine of frustration of purpose under the common law. See Berline v. Waldschmidt, 159 K. 585, 156 P.2d 865 (1945); Columbian Nat'l Title Ins. Co. v. Township Title Serv., Inc., 659 F. Supp. 796 (D. Kan. 1987). That doctrine (as well as the doctrine of commercial impracticability as applied to buyers) likely is available under Article 2 through section 84-1-103. See Kansas City Power & Light Co. v. Pittsburg & Midway Coal Mining Co., 1989 U.S. Dist. LEXIS 15036 (D.Kan.1989).
Law Review and Bar Journal References:
"Deregulation and Natural Gas Purchase Contracts: Examination Through Neoclassical and Relational Contract Theories," Danton B. Rice, Michael A. Schlueter, 25 W.L.J. 43, 54, 59, 60 (1985).
CASE ANNOTATIONS
1. Breach of contract concerning sale of a quantity of natural gas from a specific field; seller is not relieved of liability based on the doctrine of impracticability of performance because of inadequate reserves. Sunflower Electric Coop., Inc. v. Tomlinson Oil Co., 7 Kan. App. 2d 131, 139, 141, 638 P.2d 963 (1982).
2. Take or pay clauses in natural gas contracts enforceable; increased cost alone does not excuse performance. Resources Inv. Corp. v. Enron Corp., 669 F. Supp. 1038, 1042 (D. Colo., 1987).
3. Whether commercial impracticality supports termination of a contract where unforeseeable events have created injustice examined. Kansas Baptist Convention v. Mesa Operating Limited Partnership, 253 Kan. 717, 723, 864 P.2d 204 (1993).
4. Performance of contract for sale of grain for future delivery not "made impracticable" by weather conditions that reduced yield of corn crop. Clark v. Wallace County Cooperative Equity Exchange, 26 Kan. App. 2d 463, 466, 986 P.2d 391 (1999).