Restatement of Contracts 71: What You Need to Know
Restatement of Contracts 71 (also known as the Restatement (Second) of Contracts Section 71), is a legal principle that outlines the requirements for a contract to be modified or discharged based on a party`s unforeseen circumstances. It is a concept that commonly arises in contract law and is essential to understand for anyone involved in contractual agreements.
What is Restatement of Contracts 71?
Restatement of Contracts 71 is a legal principle that explains the circumstances that would allow a contract to be modified or discharged based on unforeseen circumstances that make performance of the contract impracticable, frustrating, or impossible. The Restatement 71 provision, which is recognized by most U.S. jurisdictions, is also known as the doctrine of “impossibility of performance” or “frustration of purpose.”
In simpler terms, Restatement 71 offers a way for parties involved in a contract to change or terminate the agreement if unforeseen circumstances arise after the contract has been formed, making performance of the contract impossible or impractical. Such circumstances may include natural disasters, government actions, or other unexpected events that make it difficult or impossible for the parties to fulfill the obligations outlined in the agreement.
Impracticability and Frustration of Purpose
Under Restatement 71, a contract can be modified or discharged if the following conditions are met:
1. The occurrence of an event that makes the performance of the contract impracticable.
2. The non-occurrence of the event was a basic assumption of the contract.
3. The parties involved did not bear the risk of the occurrence of the event.
These conditions are relevant to both “impracticability” and “frustration of purpose.”
Impracticability refers to a situation where performance of the contract becomes impossible or too difficult due to unforeseen events such as natural disasters, government action, or other unforeseen circumstances. For instance, if a supplier of raw materials suddenly experiences a fire and can no longer supply the required materials to a manufacturer, the manufacturer may be excused from fulfilling their obligations under the contract if it is deemed impracticable.
Frustration of purpose occurs when the purpose of the contract becomes unattainable, despite the parties being able to perform their contractual obligations. For instance, suppose a music band agreed to play a concert in an outdoor venue, and the concert is later canceled due to a sudden increase in COVID-19 cases. In that case, the band may be excused from performing under the contract if it is considered to be frustrated.
Conclusion
Restatement of Contracts 71 is a legal principle that outlines the circumstances under which a contract can be modified or discharged based on unforeseen events that make performance of the contract impracticable or impossible. As such, it is essential to understand this principle when entering into a contractual agreement to ensure that parties involved have a mechanism for dealing with situations that could impact the performance of the contract. If you need to modify or discharge a contract based on Restatement 71, it is best to seek the advice of an experienced attorney to guide you through the process.