Impracticability and frustration of purpose under the UCC - Next Generation Bar Exam

1. A drought destroys 40 percent of a farmer's crop, which was committed by contract to several buyers. What must the farmer do?

   Allocate the remaining crop among the buyers fairly and reasonably. Where the crop from particular land was contemplated as the source, partial failure requires fair allocation rather than discharge.

2. Under UCC 2-613, what options does the buyer have if identified goods are only partly destroyed before risk passes?

   Avoid the contract or accept the goods with a fair allowance from the price. The buyer may demand inspection before choosing.

3. Under UCC 2-615, what excuses a seller's delay or failure to deliver?

   An impracticability-causing contingency whose nonoccurrence was a basic assumption, or compliance with a regulation. The seller must not have assumed the risk of the contingency.

4. Which party does UCC 2-615 expressly excuse?

   The seller. Buyers seeking excuse for frustration or impracticability rely on common-law principles preserved by the UCC.

5. What notice must a seller give when claiming excuse under UCC 2-615?

   Seasonable notice of the delay or nondelivery and, when allocating, of the buyer's estimated quota. The notice allows the buyer to decide whether to terminate or accept the reduced performance.

6. What does the UCC commentary say about a rise or collapse in the market as a ground for excuse?

   It is not an excuse, because that is exactly the risk a fixed-price contract allocates. Increased cost excuses performance only if caused by an unforeseen contingency that alters the essential nature of performance.

7. When a contingency affects only part of a seller's capacity, what must the seller do under UCC 2-615?

   Allocate production and deliveries among its customers in a fair and reasonable manner. The seller may include regular customers not then under contract and its own requirements for further manufacture.

8. Under UCC 2-614, what must a party do when the agreed delivery facility or carrier becomes unavailable but a reasonable substitute exists?

   Tender and accept the commercially reasonable substitute. Unavailability of the agreed manner of delivery is not an excuse when a reasonable alternative is available.

9. Under UCC 2-616, what options does a buyer have after receiving notice of a material delay or allocation?

   Terminate the affected portion of the contract or accept the available quota. If the buyer does not respond within a reasonable time not exceeding 30 days, the contract lapses as to the affected deliveries.

10. Under UCC 2-613, what is the effect of total destruction, without fault, of goods identified when the contract was made, before risk of loss passes?

    The contract is avoided. Neither party is liable for the other's nonperformance.

11. When does failure of a seller's source of supply excuse performance?

    When both parties contemplated that source and the seller took all reasonable steps to assure supply. Failure of a source the seller merely chose, without the buyer's contemplation, is the seller's risk.

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