Contracts and Sales Multistate Bar Practice Exam

What constitutes a discharge by impracticability?

1. Performance becomes impossible due to weather conditions

2. Extreme difficulty or expense arises that was not foreseen

3. One party decides not to perform based on market conditions

4. The parties agree to modify the contract terms

The correct answer is: Extreme difficulty or expense arises that was not foreseen

Discharge by impracticability occurs when a change in circumstances makes performance of the contract extremely difficult or costly, without being entirely impossible. This principle is rooted in the idea that parties should not be held to their contractual obligations when unforeseen events significantly impede their ability to meet those obligations. The correct choice highlights that extreme difficulty or expense arises that was not foreseen. For a successful claim of impracticability, the burden on the performing party must be such that it outweighs the original expectations of the contract, and it should be linked to a significant and unanticipated change in circumstances. This might include events such as a sudden and drastic increase in costs due to shortages or supply chain disruptions that were not predictable at the time of contract formation. The other options do not accurately capture the legal standard for impracticability. While weather conditions can lead to impossibility in performance, they do not alone qualify as impracticability unless they create an extreme difficulty that could not have been foreseen. A decision made by one party not to perform based on fluctuating market conditions does not meet the standard for impracticability because it suggests the decision is based on choice rather than unexpected hardship. Lastly, if the parties agree to modify the contract terms, this reflects mutual