Impossibility, impracticability, frustration of purpose, and risk of loss - Next Generation Bar Exam

1. Under UCC 2-509, when does risk of loss pass to the buyer in a shipment contract?

   When the seller duly delivers the goods to the carrier. A shipment contract does not require the seller to deliver the goods at a particular destination.

2. How does frustration of purpose differ from impracticability?

   Under frustration, performance remains possible but has lost its value to one party. Impracticability concerns the difficulty of performing; frustration concerns the worth of the counterperformance.

3. When goods are not shipped by carrier and the seller is a merchant, when does risk of loss pass to the buyer?

   When the buyer receives the goods. If the seller is not a merchant, risk passes on tender of delivery.

4. What must a party show to be discharged on the ground of impracticability?

   A supervening event, whose nonoccurrence was a basic assumption, made performance impracticable without its fault. The event must also be one the party did not contractually assume, expressly or by implication.

5. What may a party recover for part performance rendered before its duty was discharged by impracticability?

   Restitution for the benefit conferred. Discharge does not let the other party keep the value of the work without paying for it.

6. A builder's half-finished house is destroyed by fire without anyone's fault. What is the builder's obligation?

   To rebuild without additional payment. Construction is still possible on the site, so the builder's duty is not discharged.

7. A tenant rents a room at a premium for one day solely to watch a royal procession, and the procession is cancelled. What doctrine discharges the tenant's duty to pay?

   Frustration of purpose. Both parties understood the procession was the purpose of the rental, and its cancellation destroyed the value of the bargain.

8. What must a party show to be discharged on the ground of frustration of purpose?

   An event, whose nonoccurrence was a basic assumption, substantially frustrated its principal purpose known to both parties. The frustration must be so severe that it is not a risk the party assumed under the contract.

9. What is the effect of destruction, without fault of either party, of a specific thing necessary for performance?

   The duty to perform is discharged. The continued existence of the specific thing was a basic assumption of the contract.

10. What is the effect of the death or incapacity of a person whose personal performance is necessary?

    The duty to perform is discharged. Contracts for personal services are discharged when the performer dies or becomes unable to perform.

11. Under UCC 2-510, who bears the risk of loss when a seller tenders goods so nonconforming that the buyer may reject them?

    The seller, until it cures the defect or the buyer accepts the goods. A breaching seller cannot shift the risk of loss to the buyer through a defective tender.

12. Under UCC 2-509, when does risk of loss pass to the buyer in a destination contract?

    When the goods are duly tendered at the destination. The seller bears the risk of loss in transit under a destination contract.

13. What is the effect of temporary impracticability?

    It suspends the duty while it lasts, unless performance afterward would be materially more burdensome. If the delay would substantially change the burden, the duty is discharged rather than suspended.

14. What degree of cost increase supports a claim of impracticability?

    An extreme and unreasonable increase far beyond normal business risk. Mere unprofitability or a moderate rise in costs is a risk a fixed-price contract allocates to the performing party.

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