Summary. When something makes performance impossible, ruinously expensive, or pointless, three separate doctrines may excuse it, and they operate on different premises. A force majeure clause is a contract term interpreted like any other and construed narrowly. Impracticability is a common-law and UCC doctrine excusing performance made extraordinarily difficult by an event whose non-occurrence was a basic assumption of the contract. Frustration of purpose excuses a party whose performance remains possible but whose reason for contracting has evaporated. This article separates them, explains the elements courts actually apply, works through the pandemic-era decisions, and covers notice, mitigation, and allocation — the procedural requirements that decide most disputes before the substantive standard is reached.

Three companies want out of the same contract, for three different reasons, and only one of them has a doctrine that fits.

Company A manufactures a component in a plant that burned down. It cannot perform.

Company B can perform, but the raw material it planned to use has quadrupled in price because of an export ban. It can perform at a catastrophic loss.

Company C can perform easily and cheaply. It leased a booth at a trade show that has been cancelled. Performance — paying rent for the booth — is trivially possible and completely pointless.

A is impossibility. B is impracticability, and probably loses. C is frustration of purpose, and probably also loses, though for different reasons. And all three should have started by reading their force majeure clauses, because if the clause covers the event, the common-law doctrines are largely beside the point.

Start with the contract

A force majeure clause is a contract term. It is interpreted under ordinary principles of contract construction, which means the language controls, and courts construe these clauses narrowly against the party seeking excuse.

The narrow-construction rule. Kel Kim Corp. v. Central Markets, Inc., 70 N.Y.2d 900 (1987), is the canonical statement: force majeure clauses "are to be interpreted in accord with their purpose, which is to relieve a party of liability when the parties' expectations are frustrated due to an event that is an extreme and unforeseeable occurrence," and excuse is available "only if the force majeure clause specifically includes the event that actually prevents a party's performance." A tenant's inability to obtain liability insurance — the actual issue in Kel Kim — was not covered by a clause listing labor disputes, governmental preemption, and similar events.

The catch-all problem. Most clauses end with "or any other cause beyond the reasonable control of the party." Courts apply ejusdem generis: the catch-all is limited to events of the same general kind as those enumerated. A clause listing weather events, war, and labor strikes will not be read to cover a regulatory change or a market collapse.

Drafting responses to the narrow-construction rule:

  • Enumerate specifically, including the events you actually fear: epidemic, pandemic, public health emergency, quarantine, government order or action (whether or not valid), embargo, export or import restriction, sanctions, cyberattack, denial of service, utility or telecommunications failure, supplier failure, shortage or unavailability of raw materials or transportation, and labor disruption.
  • Make the catch-all express rather than ejusdem generis-limited: "whether or not similar to the foregoing, and whether or not foreseeable."
  • Address foreseeability explicitly. Many courts hold that a foreseeable event cannot be force majeure absent contrary language. Say that an event need not be unforeseeable.
  • Say what happens to payment obligations. Courts frequently hold that a monetary obligation is never excused, because paying money is never impossible. If you want rent or payment suspended, the clause must say so.

Structure of a force majeure clause

1. The trigger. The enumerated events plus catch-all.

2. The causation standard. This is the most consequential drafting choice and it is usually made carelessly:

  • "Prevents" — the strictest. Requires that performance be impossible.
  • "Hinders" or "delays" — significantly broader; a substantial impediment suffices.
  • "Materially and adversely affects the ability to perform" — broader still.

A party negotiating from the supplier side wants "hinders or delays." A buyer wants "prevents." The single word decides many cases.

3. Causation in fact. The event must actually cause the non-performance. This is where most claims fail on the evidence. A supplier that was already in default, already short on capacity, or already losing money on the contract cannot convert a general disruption into an excuse. Courts ask what would have happened absent the event, and the answer is proved by internal documents.

4. The excuse. What is suspended, for how long, and whether the obligation is excused or merely delayed. Address whether the contract term extends by the period of the event.

5. Notice. Almost always a condition. See below.

6. Mitigation. Usually an express obligation to use commercially reasonable — or best — efforts to overcome the event and resume performance.

7. Termination. A right for either party to terminate if the event continues beyond a stated period, commonly 30, 60, 90, or 180 days. This is essential; without it, a buyer can be locked into a dead contract indefinitely.

8. Allocation. Whether the affected party may allocate limited supply among customers, and on what basis. See the § 2-615 discussion below.

9. Exclusions. Sophisticated clauses exclude: economic hardship, changes in market conditions, increased costs, the party's own financial condition, and events caused by the party's negligence or breach.

Impracticability

Where there is no clause, or the clause does not cover the event, the common law and the UCC supply a doctrine.

The elements

Restatement (Second) of Contracts § 261: where, after a contract is made, a party's performance is made impracticable without his fault by the occurrence of an event the non-occurrence of which was a basic assumption on which the contract was made, his duty to render that performance is discharged, unless the language or the circumstances indicate the contrary.

UCC § 2-615 is the sales analogue: delay or non-delivery is not a breach if performance has been made impracticable by the occurrence of a contingency the non-occurrence of which was a basic assumption of the contract, or by compliance in good faith with any applicable foreign or domestic governmental regulation or order whether or not it later proves invalid.

Four elements, each contested:

1. An unexpected contingency occurred. Not merely an adverse one.

2. The risk was not allocated by agreement or by custom. This defeats most claims. A fixed-price contract is, by design, an allocation of price risk to the seller. A requirements contract allocates volume risk. If the contract addresses the risk — through a force majeure clause, a price adjustment mechanism, an escalation clause, or by simply fixing a price — the doctrine does not supply a different allocation. Courts also find allocation in industry custom and in the parties' relative ability to insure or hedge.

3. The occurrence made performance commercially impracticable. Not merely more expensive. The threshold is very high.

4. The non-occurrence was a basic assumption. The event must go to the foundation of the bargain rather than to its profitability.

Increased cost is almost never enough

Comment 4 to § 2-615 is explicit: "Increased cost alone does not excuse performance unless the rise in cost is due to some unforeseen contingency which alters the essential nature of the performance. Neither is a rise or a collapse in the market in itself a justification, for that is exactly the type of business risk which business contracts made at fixed prices are intended to cover."

The cases bear this out.

  • Transatlantic Financing Corp. v. United States, 363 F.2d 312 (D.C. Cir. 1966), denied excuse to a carrier forced to route around the Cape of Good Hope after the Suez Canal closed. The additional cost was roughly 14% of the contract price. Judge Wright's opinion supplies the standard three-part framework quoted above and observes that the carrier was in a better position to insure against the risk.
  • Eastern Air Lines, Inc. v. Gulf Oil Corp., 415 F. Supp. 429 (S.D. Fla. 1975), denied excuse to an oil supplier during the 1973–74 embargo and price controls, finding that Gulf had not proved its actual costs, that the events were foreseeable given the contract's own price-index mechanism, and that Gulf remained profitable overall.
  • Courts have generally required cost increases well beyond doubling before even considering excuse, and even then have often refused. Increases in the range of 50% to 100% are routinely held insufficient.

The practical implication: if you want protection against cost increases, you must contract for it — an escalation clause tied to a published index, a cost-sharing band, a most-favored-customer provision, or a right to reopen on a defined trigger. The common law will not give it to you.

Government orders

Section 2-615(a) expressly excuses good-faith compliance with a governmental regulation or order, and Restatement § 264 does the same. This is the strongest impracticability theory available, and it was the theory that worked most often during the pandemic.

Requirements: the order must actually prohibit or prevent the specific performance. An order restricting occupancy does not excuse a party who could have performed at reduced capacity, and an order affecting the counterparty's business does not excuse a party whose own performance was lawful.

Distinguish supervening illegality, where performance becomes unlawful — a stronger claim — from economic effects of regulation, which are ordinary business risk.

Subjective versus objective impracticability

The doctrine covers events making performance impracticable for anyone, not merely for this party. A supplier that cannot perform because it is undercapitalized, has lost its workforce to a competitor, or has committed the same capacity to another customer has a subjective problem, which is not an excuse. Restatement § 261, Comment e, frames this as the difference between "I cannot do it" and "it cannot be done."

A qualified exception: where the contract identifies a particular source of supply and that source fails, § 2-615 Comment 5 permits excuse — but only if the source was understood by both parties to be exclusive, which requires more than the seller's internal plan.

Frustration of purpose

Restatement (Second) of Contracts § 265: where, after a contract is made, a party's principal purpose is substantially frustrated without his fault by the occurrence of an event the non-occurrence of which was a basic assumption on which the contract was made, his remaining duties are discharged, unless the language or circumstances indicate the contrary.

The distinction from impracticability. Performance remains entirely possible. What has disappeared is the reason for performing.

The origin is the coronation cases. In Krell v. Henry, [1903] 2 K.B. 740, a defendant rented a flat overlooking the route of Edward VII's coronation procession. The King fell ill; the procession was cancelled. Paying rent was perfectly possible. The purpose — watching the procession — had evaporated, and the court discharged the obligation because both parties understood the procession to be the foundation of the transaction.

The elements courts apply:

  1. The purpose frustrated must be the principal purpose of the party seeking discharge, and it must have been so understood by both parties. A purpose known to only one side is not enough.
  2. The frustration must be substantial — "so severe that it is not fairly to be regarded as within the risks assumed under the contract." Reduced profitability does not qualify.
  3. The non-occurrence must have been a basic assumption.
  4. The party seeking discharge must be without fault, and must not have assumed the risk.

Why it rarely succeeds. The doctrine is described in nearly every opinion as narrow, and applied accordingly. A commercial tenant whose business declines, a distributor whose market shrinks, a buyer who no longer needs the goods — none of these is frustration. The contract allocated that risk when it fixed a term and a price.

What the pandemic actually decided

The 2020–2022 litigation produced the largest body of excuse cases in a century, and the results are more instructive than the volume of commentary suggested.

Force majeure claims often succeeded where the clause was specific. In re Hitz Restaurant Group, 616 B.R. 374 (Bankr. N.D. Ill. 2020), held that a lease clause covering governmental action excused a portion of rent proportional to the portion of the restaurant's operations that the executive order shut down — on-premises dining was prohibited, takeout was not, so the court excused roughly 75%. The proportional approach was influential and is a useful drafting model.

Clauses without pandemic language often failed. Courts declined to read "acts of God," "national emergency," or a labor-focused catch-all to encompass a pandemic in a number of decisions. Others went the other way. JN Contemporary Art LLC v. Phillips Auctioneers LLC, 507 F. Supp. 3d 490 (S.D.N.Y. 2020), held that a clause covering "natural disaster" encompassed the pandemic and the resulting government orders, permitting termination of an auction guarantee. The divergence turned almost entirely on the specific words.

Frustration succeeded occasionally, in narrow circumstances — most often where a lease specified a use that became unlawful, and where the prohibition was total rather than partial. Courts distinguished between a restaurant that could sell takeout and a gym that was entirely closed.

Payment obligations were generally not excused. The rule that monetary obligations cannot become impossible held firm, absent express clause language.

The durable lessons:

  1. Specificity in the clause decided the outcome far more often than any doctrinal nuance.
  2. Partial and proportional excuse is a real and useful concept, and clauses should address it.
  3. Foreseeability after 2020 is different. A contract signed today cannot treat pandemics, supply chain disruption, or government emergency orders as unforeseeable. Excuse for those events must now come from the clause, not from the common law.
  4. Notice provisions were dispositive in a substantial number of cases where the substantive claim was strong.

Notice, mitigation, and allocation

These procedural requirements decide more disputes than the substantive standards do.

Notice

Most clauses require prompt written notice, and courts treat the requirement as a condition to excuse. Failures that recur:

  • Late notice. "Promptly" and "within X days" both get enforced. Calendar it from the date the party knew or should have known.
  • Wrong recipient or method. Send to the address and by the method the notice provision specifies, and comply with any copy-to-counsel requirement.
  • Inadequate content. A good notice identifies the event, the date it began, the specific obligations affected, the expected duration, the mitigation being undertaken, and expressly reserves rights. A vague reference to "current circumstances" is a gift to the other side.
  • Silence about which obligations continue. State clearly what you will continue to perform.

Also relevant: UCC § 2-615(c) requires the seller to notify the buyer seasonably of delay or non-delivery, and of the estimated quota if allocation is involved. And § 2-616 gives the buyer, on receiving such notice, the right to terminate as to the affected deliveries or to accept the allocation — with a thirty-day deadline for the buyer's response, after which the contract lapses as to the affected deliveries.

Mitigation

Whether or not the clause says so, the party claiming excuse must show reasonable efforts to perform anyway. Courts examine:

  • Whether alternative sources of supply, materials, or labor were sought, and at what cost.
  • Whether alternative methods of performance were considered — UCC § 2-614 requires the parties to use a commercially reasonable substitute where the agreed berthing, loading, or delivery facilities become unavailable, and to accept a commercially substantial substitute means of payment where the agreed means fails.
  • Whether the party prioritized other customers or its own affiliates.
  • Whether the party communicated and worked with the counterparty.

Document the mitigation contemporaneously. The record built during the disruption is the evidence, and it cannot be created afterward.

Allocation among customers

UCC § 2-615(b): where the contingency affects only part of the seller's capacity, the seller must allocate production and deliveries among his customers in a manner that is fair and reasonable, and may include regular customers not then under contract as well as its own requirements for further manufacture.

How to do it defensibly:

  • Adopt a written allocation methodology before allocating — historical purchase volumes over a defined period is the most common and most defensible basis.
  • Apply it consistently across all customers, including affiliates.
  • Do not favor spot-market buyers paying higher prices. This is the most common allegation and the hardest to defend.
  • Document the methodology, the calculation, and the approval.
  • Give the § 2-615(c) notice with the estimated quota, so the buyer's § 2-616 election period begins.

Related contract mechanisms

Hardship clauses. Common in international and long-term contracts, and distinct from force majeure. A hardship clause is triggered by an event that fundamentally alters the equilibrium of the contract, and its consequence is an obligation to renegotiate rather than excuse. The UNIDROIT Principles supply a widely used model. In a long-term supply contract, a hardship clause is often more valuable than a broader force majeure clause, because it produces an adjusted contract rather than a terminated one.

Price escalation and index clauses. The direct answer to cost risk. Tie price to a published index — a producer price index series, a commodity benchmark, a published freight rate — with a defined adjustment frequency, a cap and floor if desired, and a mechanism for what happens if the index is discontinued.

Material adverse change and material adverse effect. Acquisition-agreement provisions permitting a buyer to walk. Delaware's standard is famously demanding: the effect must be durationally significant, measured in years rather than quarters, and industry-wide effects are typically carved out. The Akorn litigation remains the leading example of a buyer actually succeeding.

Termination for convenience. The simplest solution to an event nobody can predict. A right to terminate on notice, with a defined wind-down payment, avoids the entire doctrinal exercise. It is standard in government contracting and underused commercially.

Conditions precedent. Where a party's obligation depends on an external event — a permit, a financing, a third-party approval — draft it as a condition rather than relying on excuse doctrines if it fails.

The CISG and civil law systems

CISG Article 79 excuses a party who proves that the failure was due to an impediment beyond his control that he could not reasonably be expected to have taken into account at the time of contracting or to have avoided or overcome. Notable features:

  • The excuse extends to failures by a third-party subcontractor only if the subcontractor would also be excused under Article 79 — a stricter rule than most domestic law.
  • The exemption relieves only from damages; the other party retains rights to avoid the contract, reduce price, and require performance where available.
  • The exemption lasts only for the period during which the impediment exists.
  • Notice must be given within a reasonable time, and failure to give it makes the non-performing party liable for damages caused by the non-receipt.

Civil law systems generally recognize a force majeure doctrine as a matter of code rather than contract, and many recognize hardship (imprévision, Wegfall der Geschäftsgrundlage) permitting judicial adjustment of the contract — a remedy essentially unavailable in American courts. French law, since its 2016 reform, expressly permits a court to revise or terminate a contract on a party's request where an unforeseeable change makes performance excessively onerous. A U.S. company contracting under foreign law should understand that a court may rewrite the deal, which is both a risk and, sometimes, an opportunity.

A playbook for the disrupted party

Within 48 hours of the event:

  1. Pull the contract and read the notice provision first. Not the force majeure clause — the notice provision. It has a clock.
  2. Read the force majeure clause word by word, comparing the enumerated events to what actually happened, and identify the causation standard ("prevents" versus "hinders").
  3. Identify precisely which obligations are affected and which are not. Partial excuse is a real remedy and an overbroad claim undermines credibility.
  4. Send notice that complies with the provision exactly, and reserve all rights, including rights under doctrines outside the clause.
  5. Open a contemporaneous file documenting the event, its effects, and every mitigation effort. Assume this file will be produced.

In the following weeks:

  1. Mitigate visibly. Solicit alternative suppliers and keep the quotes. Investigate alternative transport, materials, and methods, and keep the analysis.
  2. Adopt a written allocation methodology if capacity is limited, and apply it consistently.
  3. Communicate. Counterparties who are kept informed settle; counterparties who learn of a problem from a missed shipment litigate.
  4. Check insurance. Business interruption, contingent business interruption (covering a supplier's loss), trade disruption, and political risk policies may respond. Notice deadlines are short.
  5. Check upstream. If your supplier declared force majeure on you, evaluate its claim on the same standards, and preserve your rights against it.

Before agreeing to anything:

  1. Do not concede a modification casually. An agreed price increase or schedule change may waive rights. Document any accommodation as temporary, without prejudice, and not a course of dealing.
  2. Consider a standstill or interim agreement that preserves both parties' positions while the disruption resolves.

A playbook for the counterparty receiving a declaration

  1. Do not accept it at face value, and do not reject it reflexively. Both are mistakes.
  2. Test the clause. Is the claimed event enumerated or within a properly drafted catch-all? Does the causation standard fit?
  3. Test causation in fact. Ask for specifics: which facility, which input, which order, which government order, and what the party's position was before the event. A party already in default or already short on capacity has a weak claim, and this is provable.
  4. Test mitigation. Ask what alternatives were pursued and demand documentation. Ask how the party allocated among customers and on what basis.
  5. Check whether notice complied, and preserve the objection in writing if it did not.
  6. Evaluate your § 2-616 election if goods are involved, and make it within thirty days.
  7. Consider cover. UCC § 2-712 permits a buyer to procure substitute goods and recover the difference. Document the cover purchase carefully — reasonableness and good faith are the elements.
  8. Watch the termination trigger. If the clause allows termination after a stated period, calendar it, because a party that keeps performing past the trigger may be found to have waived.
  9. Assess your own downstream obligations immediately, and give your own notices where a chain of contracts is affected.

Drafting the clause you would want to have

A serviceable modern clause does the following, and most clauses in circulation do only half of it:

  • Enumerates specific events including pandemic, epidemic, public health emergency, quarantine, governmental order or action whether or not valid, embargo, sanctions, export and import restriction, cyberattack, denial of service, failure of utilities or telecommunications, unavailability of raw materials, components, or transportation, and supplier failure — with an express statement that supplier failure counts only where the supplier's own failure would qualify.
  • Includes a catch-all stated to apply "whether or not similar to the foregoing and whether or not foreseeable."
  • Selects the causation standard deliberately.
  • Excludes economic hardship, market changes, cost increases, and the party's own financial condition — or, if the party wants those covered, includes them expressly, because silence favors the other side.
  • Addresses payment obligations explicitly, one way or the other.
  • Requires notice within a defined number of days, with defined content, and states whether notice is a condition.
  • Requires mitigation to a defined standard, and requires reporting on it.
  • Permits proportional and partial excuse rather than an all-or-nothing outcome.
  • Requires fair allocation among customers, with a stated methodology.
  • Grants both parties termination rights after a defined continuation period.
  • States the effect on the term, on minimums, and on exclusivity.
  • Preserves or waives the common-law doctrines expressly. A clause stating that it is the sole and exclusive remedy for the events it addresses will generally displace the common law; one that is silent may not.

Closing observation

The three doctrines in this article have a common structure: each asks whether a risk was allocated, and if it was not, whether the event was so far outside the parties' assumptions that enforcing the bargain would be unreasonable. American courts answer that question conservatively, and the reason is defensible. Contracts exist to allocate risk, and a doctrine that discharged obligations whenever performance became painful would make them worth much less.

The consequence for practitioners is that the doctrine is not the plan. A party that finds itself arguing impracticability has usually already lost the important battle, which was drafting a clause that covered the event. The pandemic taught the profession that lesson at scale, and the clauses written since 2021 are visibly better for it. The next disruption will be something else — a cyber event, a sanctions regime, an infrastructure failure, a climate-driven interruption of a single port — and the same question will be asked of the clause: does it name this, and does it say what happens.

Sector notes

The doctrines are general; how they play out is not.

Construction. Delay is the central concern, and the analysis runs through the contract's differentiation among excusable, compensable, and concurrent delay. An excusable delay extends the schedule but earns no money; a compensable delay earns both time and cost. Force majeure events are typically excusable but non-compensable, which means the contractor gets relief from liquidated damages but absorbs its own extended general conditions. Standard industry forms address this expressly, and negotiated riders frequently change it. Add the notice provisions in most construction contracts — often as short as seven or fourteen days from the event, with a separate claim submission deadline — and the procedural trap is severe.

Commercial leases. The recurring question is whether rent is excused, and the default answer is no. Leases are conveyances as well as contracts in many states, and the historical rule placed the risk of loss of use on the tenant, subject to statutory or contractual abatement for casualty and condemnation. A tenant wanting relief needs an express abatement provision covering government-ordered closure, a co-tenancy clause, or a use clause narrow enough to support a frustration argument. A landlord's force majeure clause is often drafted to excuse the landlord's obligations while expressly preserving the tenant's rent obligation, and courts enforce that asymmetry.

Energy and commodities. Long-term supply arrangements typically use industry-standard forms with well-developed force majeure and price-reopener provisions, and the disputes tend to be about whether a party may claim force majeure for the economic consequences of an event — a plant that could run but not profitably. Standard forms increasingly exclude economic force majeure expressly for that reason.

Transportation and logistics. Carrier liability runs through separate statutory regimes, principally the Carmack Amendment for domestic motor and rail carriage and international conventions for air and sea, each with its own excepted causes including act of God, act of the public enemy, act of the shipper, public authority, and inherent vice. A shipper's contract claim against a carrier is generally displaced by those regimes, and analyzing it as a force majeure question produces the wrong framework entirely.

Services and staffing. Where the performance is personal, Restatement § 262 discharges the duty on the death or incapacity of a person necessary for performance. For an entity providing services through employees, that doctrine does not apply, and workforce disruption is generally the provider's risk absent a clause saying otherwise.

Technology and cloud. Service level agreements handle disruption through credits rather than excuse, and most SLAs exclude force majeure events from the availability calculation entirely. A customer for whom continuity is critical should negotiate a termination right on sustained unavailability, an escrow or portability commitment, and a disaster recovery obligation with a tested recovery time objective — none of which is supplied by the force majeure clause.

Primary authority

Excuse doctrines live in three places at once: the contract, the UCC, and the common law of the forum state.

  • UCC § 2-615 — commercial impracticability for sellers, and the allocation duty when performance is partially possible.
  • UCC § 2-614 — substituted performance when the agreed berthing, loading, or payment method becomes unavailable.
  • UCC § 2-613 — casualty to identified goods.
  • Restatement (Second) of Contracts § 261 — the modern impracticability formulation, and § 262 and § 263 for death or incapacity and destruction of a specific thing.
  • Restatement (Second) of Contracts § 265 — frustration of purpose, which requires that the frustrated purpose be a basic assumption of both parties.
  • Restatement (Second) of Contracts § 264 — prevention by government regulation or order, the cleanest excuse route in a regulatory shutdown.
  • Taylor v. Caldwell, 3 B. & S. 826 (K.B. 1863) — the origin of the implied condition, and still the cleanest statement of it.
  • Krell v. Henry, [1903] 2 K.B. 740 — the coronation case, and the outer edge of frustration.
  • Transatlantic Financing Corp. v. United States, 363 F.2d 312 (D.C. Cir. 1966) — the three-part impracticability test most American courts still apply, and the reminder that increased cost alone is not enough.
  • Eastern Air Lines, Inc. v. Gulf Oil Corp., 415 F. Supp. 429 (S.D. Fla. 1975) — the price-escalation case that set the modern bar for "impracticable."
  • CISG Article 79 — the international exemption provision, notably narrower than most force majeure clauses.

Related articles

This article is provided for general informational purposes and does not constitute legal advice. Force majeure clauses are interpreted under the governing law chosen by the contract, and states differ materially on impracticability, frustration, and the effect of foreseeability. Consult qualified commercial counsel before declaring or responding to a force majeure event.