Contract Breach and Contract Discharge Due to Impossibility: A Unified Theory

Abstract

The literature on contract remedies treats breach of contract and discharge of contract due to impossibility, impracticability, or frustration as completely separate problems calling for completely different solutions. Breach of contract has been analyzed as a problem in how to use damage remedies as prices which will encourage economically efficient behavior by the breaching party. Discharge of contract, in contrast, has been analyzed as a question of whether or not to excuse the non-performing party without imposing any penalty at all, with the answer often depending on which party is the superior risk bearer. I argue in this paper that both problems should be analyzed using the theory of contract breach.