This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
If the alleged impossibility has the characteristics which are necessary to make it operative,1 and if it is of such a sort as to prevent performance of the contract itself,2 it operates as a discharge of such contract.3 If, however, the impossibility does not affect the performance of the contract itself, but merely prevents one of the parties from accomplishing the purpose with which he entered into the contract, such impossibility does not operate as a discharge.4 The practical difficulties in the application of this principle consists in determining whether the purpose, the accomplishment of which is prevented by the impossibility, is a term of the contract or whether it is merely the inducement to one of the parties to enter into it. If property is leased for a certain purpose, and such purpose becomes legally impossible, it is ordinarily held that such impossibility operates as a discharge of such contract if by the terms of the contract the property could be used only for such purpose: while if the purpose for which the property was to be used was not expressed or if such use was permissive only, and if the lessee was free by the terms of the contract to use the property for other purposes, such impossibility does not discharge the contract.5 A number of cases in which the purpose became impossible by reason of subsequent facts arose out of the postponement of the coronation of Edward VII of England. Booms had been rented from which to view the coronation procession, and vessels had been chartered for the purpose of seeing the fleet and the naval review, and a number of questions were presented as to the effect of the postponement of the coronation on these contracts. It was held that if such purpose was not the "basis and foundation" of the contract, the postponement of the coronation did not operate as a discharge,6 while if such purpose was the basis and foundation of the contract, the postponement of the coronation operated as a discharge.7 A contract by which a vessel was to be at the disposal of the adversary party for two specified days "for the purpose of viewing the naval review and for a day's cruise around the fleet," was held not to be discharged by the postponement of the naval review, since the vessel could have been used for the purpose of cruising around the fleet.8 A similar contract for the use of a vessel for "the term of three days from the hour she is placed at the charterer's disposal in London on the day preceding that on the naval review," was held not to be discharged by the postponement of the naval review.9 On the other hand, a license for the entire use of certain rooms during the days, but not the nights, of two specified days, which, in fact, were the days on which the procession was to be held, was held to be a license for a particular purpose, and no other, namely, the purpose of viewing the procession from such rooms; and accordingly the contract was held to be discharged by the postponement of the procession.10
9 Chappell v. McMillan, 15 N. M. 686, 113 Pac. 611. 10 Barkworth v. Young, 4 Drew. 1.
11 Hunter Canal Co. v. Robertson, 113 La. 834, 37 So. 771.
12 Smith v. Durell, 16 N. H. 344, 41 Am. Dec. 732.
13 Brown v. Dillahunty, 12 Miss. (4 8m. & M.) 713, 43 Am. Dec 499.
1 See Sec. 2676. et seq.
2 See Sec. 2781 et seq.
3 See Sec. 2711 et seq.
4 England. Heme Bay Steamboat Co. v. Hutton , 2 K. B. 683; Civil
Alabama. O'Byrne v. Henley, 161 Ala. 620, 23 L. R. A. (N.S.) 496, 50 So. 83.
Georgia. Lawrence v. White, 131 Ga. 840, 15 Am. & Eng. Ann. Cas. 1097, 19 L. R. A. (N.S.) 966, 63 S. E. 631; J. J. Goodrum Tobacco Co. v. Potts-Thompson Liquor Co., 133 Ga. 776, 26 L. R. A. (N.S.) 498, 66 S. E. 1081.
Kentucky. Baughman v. Portman, (Ky.), 14 S. W. 342, 12 Ky. L. Rep. 342.
Louisiana. Shreveport Ice & Brewing Co. v. Mandel, 128 La. 314, 54 So. 831.
Maryland. Standard Brewing Co. v. Weil, 129 Md. 487, L. R. A. 1917C, 929, 99 Atl. 661.
Massachusetts. Gaston v. Gordon, 208 Mass. 265, 94 N. E. 307.
Texas. Houston Ice & Brewing Co. v. Keenan, 99 Tex. 79, 88 S. W. 197; Ban Antonio Brewing Asso. v. Brents, 39 Tex. Civ. App. 443, 88 S. W. 368.
Wyoming. Hecht v. Acme Coal Co., 19 Wyom. 18, Ann. Cas. 1913E, 258, 34 L. R. A. (N.S.) 773, 113 Pac. 788, 117 Pac 132.
5 See Sec. 2698.
6 Heme Bay Steamboat Co. v. Hut-ton [19031, 2 K. B. 683; Civil Service Co-operative Society v. General Steam Navigation Co. , 2 K. B. 756.
7 Krell v. Henry , 2 K. B. 740.
8 Herne Bay Steamboat Co. v. Hut-ton , 2 K. B. 683.
9 Civil Service Co-operative Society v. General Steam Navigation Co. [10031, 2 K. B. 766.
10 Krell v. Henry , 2 K. B. 740.
"The real question in this case is the extent of the application in English law of the principle of the Roman law which has been adopted and acted on in many English decisions, and notably in the case of Taylor v. Caldwell (3 B. & S. 826). That case at least makes it clear that 'where, from the nature of the contract, it appears that the parties must from the be-ginning have known that it could not be fulfilled unless, when the time for the fulfillment of the contract arrived, some particular specified thing continued to exist, so that when entering into the contract they must have contemplated such continued existence as the foundation of what was to be done; there, in the absence of any express or implied warranty that the thing shall exist, the contract in not to be considered a positive contract, but as subject to an implied condition that the parties shall be excused in case, before breach, performance becomes imposible from the perishing of the thing without default of the contractor.' Thus far it is clear that the principle of the Roman law has been introduced into the English law. The doubt in the present case arises as to how far this principle extends. The Roman law dealt with obligationes de certo corpore. Whatever may have been the limits of the Roman law, the case of Nickoll v. Ashton ( 2 K. B. 126), makes it plain that the English law applies the principle not only to cases where the performance of the contract becomes impossible by the cessation of existence of the thing which is the subject-matter of the contract, but also to cases where the event which renders the contract incapable of performance is the cessation or non-existence of an express condition or state of things, going to the root of the contract, and essential to its performance. It is said, on the one side, that the specified thing, state of things, or condition the continued existence of which is necessary for the fulfillment of the contract, so that the parties entering into the contract must have contemplated the continued existence of that thing, condition, or state of things as the foundation of what was to be done under the contract, is limited to things which are either the subject-matter of the contract or a condition or state of things, present or anticipated, which is expressly mentioned in the contract. But, on the other side, it is said that the condition or state of things clearly appears by extrinsic evidence to have been assumed by the parties to be the foundation or basis of the contract, and the event which causes the impossibility in of such a character that it can not reasonably be supposed to have been in the contemplation of the contracting parties when the contract was made. In such a case the contracting parties will not be held bound by the general words which, though large enough to include, were not used with reference to a possibility of a particular event rendering performance of the contract impossible. I do not think that the principle of the civil law as introduced into the English law is limited to cases in which the event causing the impossibility of performance is the destruction or non-existence of some thing which is the subject-matter of the contract or of some condition or state of things expressly specified as a condition of it. I think that you first have to ascertain, not necessarily from the terms of the contract, but, if required, from necessary inferences, drawn from surrounding circumstances recognized by both contracting parties, what is the substance of the contract, and then to ask the question whether that substantial contract needs for its foundation the assumption of the existence of a particular state of things. If it does, this will limit the operation of the general words, and in such case, if the contract becomes impossible of performance by reason of the non-existence of the state of things assumed by both contracting parties as the foundation of the contract, there will be no breach of the contract thus limited." Krell v. Henry , 2 K. B. 740.