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American Contract Law for a Global Age, 2017a

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Unit 22<br />

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PERFORMANCE AND BREACH<br />

Part Two<br />

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Excused Per<strong>for</strong>mance<br />

FOCUS OF THIS UNIT<br />

When Bad Things Happen to Good <strong>Contract</strong>s. By this point, you should<br />

understand that if a party has a duty under a valid contract and fails to per<strong>for</strong>m the<br />

contract in a satisfactory manner, the contracting party is liable <strong>for</strong> breach. But what<br />

happens if a party’s failure to per<strong>for</strong>m is caused by something totally beyond its<br />

control? Suppose, <strong>for</strong> example, you agree to lease a house <strong>for</strong> a year to a tenant, and<br />

the day be<strong>for</strong>e she moves in a tornado destroys the house. Are you liable <strong>for</strong> breach<br />

of your contract with the tenant? On the other hand, is she liable to you <strong>for</strong> the rent<br />

even though the place has been destroyed?<br />

Original Strict-Liability Standard. The common law has struggled with and<br />

changed its position on these questions over the years. Originally, contracts were<br />

strict-liability undertakings. If a party failed to per<strong>for</strong>m <strong>for</strong> any reason, then he was<br />

liable <strong>for</strong> breach. Thus, in the famous English case of Paradine v. Jane, 82 Eng. Rep.<br />

897 (K.B. 1647), a tenant had rented an estate. Subsequently, he was <strong>for</strong>cibly evicted<br />

from the estate by Royalist troops during the English Civil War, who kept him out of<br />

possession <strong>for</strong> nearly two years. The tenant refused to pay rent to the owner because<br />

the tenant could not have possession, making the contract worthless to him. The court<br />

held, nonetheless, that the tenant was obliged to pay the full rent, and would have<br />

had to do so even if the whole place had burned down or been swallowed by the sea.<br />

This strict-liability doctrine, however, began to change in the middle of the<br />

nineteenth century. By the early part of the twentieth century, two English cases<br />

establishing doctrines of excused per<strong>for</strong>mance had become highly influential in the<br />

United States.<br />

Origin of “Impossibility of Per<strong>for</strong>mance” as an Excuse. The first of these two<br />

cases was Taylor v. Caldwell, 122 Eng. Rep. 309 (1863), in which a concert promoter<br />

had hired a venue called the Surrey Gardens <strong>for</strong> a major fête. Un<strong>for</strong>tunately, the<br />

Gardens were totally destroyed by fire shortly be<strong>for</strong>e the event was to take place. The<br />

promoter sued on the ground that the owners were in breach <strong>for</strong> failing to provide the<br />

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UNIT 22: EXCUSED PERFORMANCE 451

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