Bar Exam (Next Generation) Quiz: Impracticability And Frustration Of Purpose Under The Ucc
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Impracticability And Frustration Of Purpose Under The UccQuestion 1 of 12

Seller contracted to sell 50,000 bushels of wheat to Buyer A and 50,000 bushels to Buyer B. A flood destroyed 50% of Seller's crop, leaving 50,000 bushels. Seller notified both buyers that it was allocating all 50,000 bushels to Buyer A because Buyer A is a long-term customer paying a 10% premium over Buyer B's contract price. Buyer B objected.

UCC § 2-615(b) provides: 'Where a cause of the seller's failure to perform affects only a part of the seller's capacity to perform, he must allocate production and deliveries among his customers but may at his option include regular customers not then under contract as well as his own requirements for further manufacture. He may so allocate in any manner which is fair and reasonable.'

In Petoskey Mills v. Northstar Grain, the court held: 'Section 2-615(b) does not require pro rata allocation, but it does require a fair and reasonable allocation among the seller's customers. A plan that gives one existing contract customer its full contract quantity while another existing contract customer receives nothing is not fair and reasonable.'

Is Seller's proposed allocation to Buyer A permissible?

Yes, because § 2-615(b) permits allocation in any manner that is fair and reasonable, and favoring a long-term customer who pays a premium is fair and reasonable.
Yes, because § 2-615(b) permits a seller to include regular customers not then under contract, and Buyer A is a regular customer.
No, because § 2-615(b) requires Seller to allocate its remaining production pro rata among all customers then under contract.
No, because the proposed allocation gives Buyer A its full contract quantity and leaves Buyer B nothing, which is not a fair and reasonable allocation.
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Bar Exam (Next Generation) Quiz

Bar Exam (Next Generation) Quiz: Impracticability And Frustration Of Purpose Under The Ucc

Practice Impracticability And Frustration Of Purpose Under The Ucc in Bar Exam (Next Generation) with focused quiz questions that help you check what you know, review explanations, and build confidence with test-style prompts.

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This quiz focuses on Impracticability And Frustration Of Purpose Under The Ucc, giving you a quick way to practice the rules, question types, and explanations that matter most for Bar Exam (Next Generation).

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Try each quiz question before looking at the correct answer. Use the explanations to review missed ideas, then come back to similar questions until the pattern feels familiar.

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Question 1

Seller contracted to sell 50,000 bushels of wheat to Buyer A and 50,000 bushels to Buyer B. A flood destroyed 50% of Seller's crop, leaving 50,000 bushels. Seller notified both buyers that it was allocating all 50,000 bushels to Buyer A because Buyer A is a long-term customer paying a 10% premium over Buyer B's contract price. Buyer B objected.

UCC § 2-615(b) provides: 'Where a cause of the seller's failure to perform affects only a part of the seller's capacity to perform, he must allocate production and deliveries among his customers but may at his option include regular customers not then under contract as well as his own requirements for further manufacture. He may so allocate in any manner which is fair and reasonable.'

In Petoskey Mills v. Northstar Grain, the court held: 'Section 2-615(b) does not require pro rata allocation, but it does require a fair and reasonable allocation among the seller's customers. A plan that gives one existing contract customer its full contract quantity while another existing contract customer receives nothing is not fair and reasonable.'

Is Seller's proposed allocation to Buyer A permissible?

  1. Yes, because § 2-615(b) permits allocation in any manner that is fair and reasonable, and favoring a long-term customer who pays a premium is fair and reasonable.
  2. Yes, because § 2-615(b) permits a seller to include regular customers not then under contract, and Buyer A is a regular customer.
  3. No, because § 2-615(b) requires Seller to allocate its remaining production pro rata among all customers then under contract.
  4. No, because the proposed allocation gives Buyer A its full contract quantity and leaves Buyer B nothing, which is not a fair and reasonable allocation. (correct answer)
Explanation: Whenever you see a seller short on supply after a partial disruption, UCC § 2-615(b) governs: the seller must allocate remaining capacity among customers, but the statute does not mandate pro rata shares—it mandates a fair and reasonable allocation. Here, Seller has only 50,000 bushels to satisfy two 50,000-bushel contracts. Giving Buyer A its entire 50,000 and Buyer B nothing is not fair and reasonable under the rule in Petoskey Mills, which specifically rejects a plan that leaves one existing contract customer with zero while another gets its full quantity. That is why the correct answer is the one stating the allocation is impermissible because it gives Buyer A full quantity and Buyer B nothing. The tempting answer that approving the allocation as "fair and reasonable" because Buyer A is a long-term premium customer misses the point: loyalty and premium pricing may be relevant factors, but they cannot justify completely excluding another current contract customer. The answer that cites including regular customers not then under contract misreads the statute—Buyer A is already under contract, and that provision allows adding non-contract customers, not starving a contracted one. And the answer claiming § 2-615(b) requires pro rata allocation is the opposite of the court's holding: pro rata is one fair method, not an absolute requirement. On exam day, when you see partial allocation after a shortage, check whether any existing contract customer is left with nothing—that pattern usually signals an unfair allocation.

Question 2

Seller agreed to sell 5,000 tons of specialty steel to Buyer, delivery November 1. On September 1, the U.S. Department of Commerce issued an order prohibiting all domestic manufacturers from exporting specialty steel until January 1. Seller, which had no domestic buyers for the steel, did not deliver on November 1 and notified Buyer that it was excused. On December 1, a federal court held that the Commerce order was invalid because it exceeded the agency's statutory authority. Buyer sued for damages for the November 1 nondelivery.

UCC § 2-615(a) provides: '... delay in delivery or nondelivery in whole or in part by a seller ... is not a breach of his duty under a contract for sale if performance as agreed has been made impracticable by ... compliance in good faith with any applicable foreign or domestic governmental regulation or order whether or not it later proves to be invalid.'

Is Seller excused from liability for the November 1 nondelivery?

  1. Yes, because Seller's compliance with the order was in good faith, and § 2-615 excuses compliance with a governmental order even if the order later proves invalid. (correct answer)
  2. Yes, because the order made performance illegal, and a contract whose performance is illegal is void and unenforceable.
  3. No, because a regulation later held invalid is void from the start, so Seller's performance was never legally prevented.
  4. No, because Seller could have challenged the order or sought an exemption before the delivery date, and its failure to do so was not good faith.
Explanation: Whenever you see a UCC § 2-615 excuse question, your focus should be on the seller's good faith and whether the event made performance impracticable, not on the ultimate validity of the triggering event. Here, Seller complied with the Department of Commerce order in good faith, and because Seller had no domestic buyers, that order made the export contract impracticable. The statute's exact wording excuses compliance with a governmental order "whether or not it later proves to be invalid," so the December court ruling does not create liability for the November non-delivery. The choice saying "yes, because compliance was in good faith" is therefore correct. The answer claiming the contract is "void and unenforceable" is wrong because § 2-615 excuses performance without voiding the contract; it merely suspends the obligation. The answer that the order being "void from the start" means performance was never prevented is the classic trap—it applies common law retroactivity, but the UCC expressly overrides that principle. Finally, the suggestion that Seller had to "challenge the order or seek an exemption" to show good faith is incorrect; the UCC does not require a seller to litigate a government directive before complying with it. A brief note: good faith compliance is presumed unless there is collusion. Your takeaway is to watch for the UCC's explicit statutory language overriding common law rules about invalid government actions.

Question 3

Seller agreed to sell 1,000 tons of structural steel to Buyer at $500 per ton. Seller's anticipated cost was $400 per ton. Before delivery, the government suddenly imposed a 200% tariff on imported iron ore, raising Seller's production cost to $1,200 per ton. Seller can still buy steel on the world market for $1,100 per ton and deliver it, but would lose $600 per ton. Seller refused to deliver, claiming impracticability.

UCC § 2-615, Official Comment 4 provides: 'Neither is a rise or collapse in the market in itself a justification, for that is exactly the type of business risk which the contract is intended to cover. Nor is a rise in the cost of performance in itself a justification, unless it is due to some unforeseen contingency which alters the essential nature of the performance.'

Is Seller excused from delivering the steel?

  1. Yes, because the tariff was an unforeseen governmental regulation that made Seller's performance commercially impracticable by increasing its cost to $1,200 per ton.
  2. Yes, because the 200% cost increase was an extreme hardship caused by an unforeseen contingency and altered the essential nature of Seller's performance.
  3. No, because the cost increase did not alter the essential nature of the performance; Seller can still deliver by buying steel on the open market. (correct answer)
  4. No, because by agreeing to a fixed price, Seller assumed the risk of all increases in production costs, including those caused by the tariff.
Explanation: Whenever you see a seller claiming impracticability under UCC § 2-615, separate true inability from mere unprofitability. The key is whether an unforeseen contingency changed the essential nature of the performance, not just made the deal bad. Here Seller can still perform: it can buy steel on the world market for $1,100 per ton and deliver the contracted steel. That would lose money, but the contract is still for structural steel; delivering it is not fundamentally different from what Seller promised. A dramatic cost increase—even one caused by a new tariff—does not excuse performance unless it goes to the essence of the obligation. So the answer is the one that says the cost increase did not alter the essential nature because Seller can buy steel on the open market. The choice saying the tariff made performance commercially impracticable by raising cost to $1,200 is wrong because cost alone, even a severe increase, is a business risk; Official Comment 4 says market rises and cost increases are not themselves justifications. The choice saying the 200% increase was extreme hardship that altered the essential nature is wrong because hardship is not the test, and the essential nature—delivering steel—remained the same. Finally, the choice saying Seller assumed the risk of all production-cost increases by agreeing to a fixed price is too broad; fixed pricing allocates ordinary market risk, but an unforeseen contingency could theoretically excuse performance. Here, however, the substitute-performance option defeats excuse. Study tip: ask, "Can the seller still deliver the contracted goods?" If yes, the case is likely unprofitability, not impracticability.

Question 4

Evergreen Farms agreed to sell 100,000 pounds of specialty pumpkin seed to each of three food companies: A, B, and C. A virus destroyed 60% of the regional pumpkin seed crop, leaving Evergreen with only 120,000 pounds available to deliver in total. Evergreen notified all three buyers and proposed to deliver 40,000 pounds to each. Company A, whose contract was signed first, demands its full 100,000 pounds and argues that the later contracts should bear the entire shortage.

Which legal issue is most directly raised by Company A's demand?

  1. Whether the virus was foreseeable to Evergreen when it signed the contracts.
  2. Whether Company A's contract has priority because it was formed before the other contracts.
  3. Whether Evergreen must allocate its limited supply among its buyers in a fair and reasonable manner. (correct answer)
  4. Whether Evergreen is entirely discharged from all delivery obligations by the crop loss.
Explanation: Whenever you see a shortage of goods and a seller with multiple buyers, think of UCC Section 2-615. That rule covers impracticability when a seller's capacity is partially reduced: the seller is not automatically excused, and it must allocate its remaining supply among its buyers in a fair and reasonable manner. Here, Evergreen has only 120,000 pounds to fulfill contracts totaling 300,000 pounds. Its proposal to deliver 40,000 pounds to each buyer could satisfy fair-and-reasonable allocation. Company A's demand, however, asks the law to favor it solely because its contract came first. That is not how the UCC works. Absent a contract term giving priority to earlier contracts, the seller may allocate shortages proportionally or by other equitable means. The wrong answer about the virus being foreseeable misses the point: foreseeability matters only to whether the shortage is excused, not to how the remaining supply is distributed. The answer claiming Company A's contract has priority because it was signed first reflects a common-law, not UCC, instinct; the UCC does not create a first-in-time lien on performance. Finally, the answer that Evergreen is entirely discharged is too extreme—the virus destroyed only part of the crop, so Evergreen still has 120,000 pounds and must perform to that extent. Your takeaway: on bar-exam questions, distinguish total impracticability from partial shortage. When the seller still has some goods, the key issue is usually fair allocation, not excuse.

Question 5

A catering company ordered 5,000 commemorative wine glasses from a glassware manufacturer. The glasses were to be etched with the names of a specific couple and their wedding date, and the manufacturer knew the glasses were for sale to guests at that wedding. The week before delivery, the wedding was canceled because the bride was deployed overseas. The catering company notified the manufacturer that it would not accept or pay for the glasses. The glasses conform to the contract and cannot be sold to other customers because of the etching.

Which legal doctrine is most directly raised by the catering company's refusal to accept the glasses?

  1. Failure of consideration
  2. Commercial impracticability
  3. Mutual mistake
  4. Frustration of purpose (correct answer)
Explanation: Whenever you see a refused contract performance after an unexpected event, ask two questions: Is performance still physically possible? And is the promised exchange now worthless to the performing party? Here, the manufacturer can still deliver the etched glasses—so impossibility and impracticability are not the core issue. The problem is that the wedding's cancellation destroyed the entire purpose of buying custom wedding memorabilia, even though the glasses conform to the contract. Frustration of purpose applies when an unforeseen event, not caused by either party, substantially destroys the purpose of the contract, and neither party assumed the risk. That fits perfectly: the bride's deployment canceled the wedding, making the glasses useless for their intended sale to guests. The catering company's refusal is therefore legally excused. Failure of consideration might tempt you because the company got nothing useful, but consideration fails when a promised performance is not rendered or is absent—here, manufacturey is ready andhe glasses conform; the problem is not a missing exchange, it is a destroyed purpose. Commercial impracticability would require that performance has become excessively costly, difficult, or harmful—delivering glasses is still easy. Mutual mistake requires both parties erred about a fact existing at contract formation, such as the wedding date; the cancellation happened later, so it is a supervening event. Thus, when performance is still possible but the contract's reason for existing has evaporated, think frustration of purpose—the "why" died,chanthe "what" remains.

Question 6

Seller, a specialty chemical manufacturer, agreed to sell Buyer 5,000 gallons of a custom resin for $20,000. Seller planned to produce the resin using a chemical compound that it had arranged to buy from Refinery X. Before Seller began production, an explosion destroyed Refinery X. Seller could obtain the compound from Refinery Y, but only by paying a price that would make the contract deeply unprofitable. Seller refuses to deliver. Buyer sues for breach.

Which additional fact would be most important in evaluating whether Seller's performance is excused?

  1. The written contract stated that the resin was to be manufactured using compound supplied by Refinery X. (correct answer)
  2. The compound from Refinery Y would have satisfied all of Buyer's specifications, but at a higher cost.
  3. The explosion at Refinery X was caused by the negligence of Refinery X's employees.
  4. Buyer had not yet paid any part of the $20,000 contract price when the explosion occurred.
Explanation: When a seller fails to deliver because a crucial supply is destroyed, your analysis should center on the doctrine of commercial impracticability under UCC 2-615. The core question is whether the non-occurrence of the event was a basic assumption of the contract—meaning the parties allocated the risk. Here, the most important fact is whether the contract specifically identified Refinery X as the source. If the written contract states the resin was to be manufactured using compound supplied by Refinery X, the parties expressly conditioned the seller's performance on that source. Its destruction makes performance impracticable, and the seller's duty is discharged. Now the distractors. The compound from Refinery Y satisfying Buyer's specs but at a higher cost is a red herring—mere increased cost or unprofitability is not enough to excuse performance unless extreme, and having an alternative source actually weakens the defense. The negligence of Refinery X's employees is irrelevant; the seller's excuse doesn't depend on a third party's fault. Finally, Buyer not having paid any part of the price is immaterial to whether performance is excused—payment is a condition of the buyer's performance, not the seller's duty. Your study tip: Whenever a seller claims impracticability, ask whether the contract specifically allocated the risk. If the contract names the source, that allocation is dispositive; if not, the seller bears the risk of market shortages.

Question 7

A snack food company contracted to buy 100,000 pounds of roasted peanuts from a wholesale distributor at $1.50 per pound. Before the delivery date, a drought in the main growing region cut the peanut harvest by half, and the wholesale market price rose to $2.75 per pound. The distributor can obtain peanuts at the market price but would lose $125,000 on the contract. The distributor refuses to deliver.

Which additional fact would be most important in evaluating whether the distributor's performance is excused?

  1. The distributor had not yet purchased any peanuts when the drought occurred.
  2. The contract expressly placed the risk of a price increase caused by a short crop on the distributor. (correct answer)
  3. The snack food company had a contract to resell the peanuts to a grocery chain at $2.00 per pound.
  4. The drought also reduced peanut production in the other major growing countries.
Explanation: This question tests whether a party can be excused from performance when performance becomes more expensive. The key is risk allocation: a "drought" or "price spike" does not automatically excuse performance unless the contract—or law—put the risk of that event on the party now refusing to perform. The decisive fact is that the contract expressly placed the risk of a price increase caused by a short crop on the distributor. That fact directly answers the excuse question: the distributor agreed to bear this exact risk, so the market price rise does not excuse delivery. The distributor must perform or pay damages. Now consider the other facts. The distributor had not yet purchased any peanuts when the drought occurred is irrelevant; a seller's failure to source before a price change does not shift contractual risk. The snack food company had a contract to resell the peanuts at $2.00 per pound may affect the buyer's damages, but it does not excuse the distributor's duty. Finally, the drought also reduced peanut production in other major growing countries might make the shortage more widespread, but even a severe price increase is ordinarily not "impracticability" unless performance is truly impossible or fundamentally different from what was contemplated—and here the contract already assigned that risk. Strategy tip: when a question asks whether performance is "excused," immediately look for who assumed the risk of the interfering event. Express contract language on risk beats general hardship arguments.

Question 8

Seller agreed to sell 10,000 circuit boards to Buyer. The contract contained this clause: 'Seller will not be liable for delay or non-delivery caused by fire, flood, strike, embargo, or failure of Seller's suppliers to deliver materials, provided Seller gives Buyer written notice of the event within 10 days after Seller learns of it.' Seller's sole supplier of a key chip was destroyed by fire. Seller learned of the fire on March 1, could not obtain chips elsewhere, and did not notify Buyer until March 20. Seller now refuses to deliver.

UCC § 2-615(c) provides: 'The seller must notify the buyer seasonably that there will be delay or non-delivery...'

UCC § 1-302(a) provides: 'Except as otherwise provided in this Act, the effect of provisions of this Act may be varied by agreement.'

Which of the following is most accurate regarding Seller's obligation?

  1. Seller is excused because the fire was a supplier failure listed in the clause and made performance impracticable under UCC § 2-615.
  2. Seller is excused because its notice, although late under the clause, was seasonable under UCC § 2-615(c) and Buyer was not prejudiced.
  3. Seller is not excused because by relying on a single supplier, Seller assumed the risk of that supplier's failure and cannot claim impracticability.
  4. Seller is not excused because the contract made notice within 10 days a condition of excuse, and Seller did not satisfy that condition. (correct answer)
Explanation: This question tests the interplay between UCC § 2-615 (excuse for impracticability) and the parties' freedom to modify UCC default rules under § 1-302. When a contract adds specific requirements on top of a statutory excuse, remember that the explicit contract terms generally control. Here, the supplier's fire is a classic impracticability event, and the contract even lists "failure of Seller's suppliers to deliver materials" as a covered excuse. However, that excuse is expressly conditioned on Seller giving written notice "within 10 days after Seller learns of it." This is a condition precedent. Seller learned of the fire on March 1 but did not notify Buyer until March 20—a full 19 days late. Under § 1-302, parties may vary the UCC's default "seasonable" notice requirement from § 2-615(c) by agreement. Because the contract made the 10-day notice a strict condition, Seller's failure to meet it means Seller is not excused from performance. Choice A is wrong because it correctly identifies the fire as a qualifying event but ignores the contractual notice condition—the excuse is not automatic, it is contingent on timely notice. Choice B is wrong because it assumes the UCC's "seasonable" standard overrides the contract's specific 10-day deadline; the contract replaces that default, and Buyer's lack of prejudice is irrelevant when the condition is explicitly stated. Choice C is wrong because relying on a single supplier does not automatically mean Seller assumed the risk of that supplier's failure—the contract expressly listed supplier failure as an excuse, so the problem here is purely the missed notice deadline. Strategy tip: On bar exam questions, when a contract clause says "provided that" or "conditioned upon," treat it as a condition precedent. Always check whether the party complied with the contract's specific terms before applying the UCC default rule. If the contract sets a precise deadline, that deadline governs over the UCC's vague "seasonable" standard.

Question 9

Seller agreed to sell 1,000 custom server racks to Buyer. A fire destroyed Seller's factory, and Seller sent Buyer a written notice: 'Because of the fire, delivery of all 1,000 racks is indefinitely delayed. We will notify you if and when we can produce them.' Buyer did not respond. Forty-five days later, Buyer demanded delivery of the racks.

UCC § 2-616 provides: '(1) Where the buyer receives notification of a material or indefinite delay ... he may by written notification to the seller ... (a) terminate and thereby discharge any unexecuted portion of the contract; or (b) modify the contract by agreeing to take his available quota in substitution. (2) If the buyer fails to so modify the contract within a reasonable time not exceeding 30 days, the contract lapses with respect to any deliveries affected.'

What is the effect of Buyer's failure to respond to Seller's notice?

  1. Buyer is deemed to have accepted the modified delivery date, so Seller must deliver when production resumes.
  2. The contract lapsed with respect to the deliveries affected, and Buyer has no right to demand delivery or damages for nondelivery. (correct answer)
  3. Buyer may still terminate the contract because it never agreed to modify the contract or accept a substitute.
  4. Seller's notice was an anticipatory repudiation, so Buyer may recover damages for the full contract price.
Explanation: When you see a seller respond to an unforeseen event with a notice of indefinite delay, UCC § 2-616 gives the buyer a narrow window to act. The question tests what happens if the buyer does nothing. Seller's notice was exactly the "material or indefinite delay" § 2-616 addresses. Buyer had two choices: terminate the affected part of the contract or agree to accept substitute performance. That choice had to be made in writing within a reasonable time, not exceeding 30 days. Buyer's silence for 45 days triggered the statute's lapse provision. Therefore, the affected deliveries are gone: Buyer cannot demand the racks and cannot sue for nondelivery. The trap choice saying Buyer "accepted the modified delivery date" misreads silence as assent — but under § 2-616 silence produces lapse, not a new date. The choice saying Buyer may still terminate because it never agreed is also wrong: the statutory termination right expired with the 30-day window, and the contract already lapsed. Finally, treating Seller's notice as an anticipatory repudiation is incorrect; Seller did not unequivocally refuse to perform, it claimed impracticability and gave the statutory notice, so Buyer cannot recover the full contract price. Study tip: on these facts, remember "use it or lose it." A buyer receiving an indefinite-delay notice must protect itself in writing within 30 days; failure to respond extinguishes the affected performances.

Question 10

A toy manufacturer agreed to sell a retailer 10,000 units of a children's toy for delivery in October. In September, the Consumer Product Safety Commission issued a regulation banning the sale of the toy because of a newly discovered safety hazard. The manufacturer cannot lawfully sell the toy to anyone in the country and refuses to deliver. The retailer sues.

Which additional fact would be most important in evaluating whether the manufacturer's performance is excused?

  1. The manufacturer had already begun production of the toys when the regulation was issued.
  2. The safety hazard was first discovered after the parties signed the contract. (correct answer)
  3. The retailer intended to sell the toys only during the holiday season.
  4. The manufacturer could have exported the toys to a country where they were still legal.
Explanation: This question tests the defense of supervening illegality: a party is excused from performing when a government regulation makes the promised performance unlawful, but only if the illegality arose after the contract was formed and was not reasonably foreseeable at that time. So the critical fact is the timing of the safety hazard's discovery. If the hazard was first discovered after the parties signed the contract, then the regulation was a true supervening event, and the manufacturer's performance is likely excused. If the hazard was already known when the parties contracted, the manufacturer may have assumed the risk that a ban would follow, and the excuse would fail. The other facts do not go to that essential inquiry. The fact that the manufacturer had already begun production is irrelevant; partial performance or sunk costs do not determine whether performance is excused, though they may affect restitution. The retailer's intent to sell only during the holiday season speaks to the buyer's frustration of purpose, not the seller's excuse based on illegality. And the fact that the manufacturer could have exported the toys is also not controlling: the contract was to sell and deliver to this retailer, so exporting to another country would not be performance of the agreed obligation. On the exam, when you see a regulation or statute making performance illegal, focus immediately on when the underlying condition arose relative to contract formation. Supervening illegality excuses; pre-existing illegality or foreseeable risk does not.

Question 11

Buyer, a festival organizer, ordered 50,000 custom sun hats from Seller. Each hat was printed 'Riverfest 2026.' Buyer told Seller that the hats were for Riverfest. The contract did not mention cancellation or allocate the risk of cancellation. Two weeks before the scheduled delivery, the city unexpectedly canceled Riverfest because of a bridge failure. Buyer notified Seller that it would not accept or pay for the hats. Seller sued for the price.

UCC § 1-103(b) provides: 'Unless displaced by the particular provisions of this Act, the principles of law and equity ... supplement its provisions.'

In Rivera v. Crown Supply, the court held that a buyer may assert frustration of purpose in a sale-of-goods case: 'The buyer is discharged if its principal purpose, known to the seller, is substantially frustrated by an event the non-occurrence of which was a basic assumption of the contract, and the buyer did not assume the risk of that event.'

Should Seller recover the price?

  1. Yes, because UCC Article 2 completely codifies excuses in sale-of-goods contracts and does not recognize frustration of purpose.
  2. Yes, because Buyer's duty to pay was not impracticable; Buyer could still pay for the hats and resell them elsewhere.
  3. No, because the city's cancellation substantially frustrated Buyer's principal purpose, which was known to Seller, and neither party assumed the risk of cancellation. (correct answer)
  4. No, because Buyer could have included a cancellation clause in the contract and must bear the risk of events affecting its own purposes.
Explanation: Whenever you see a sale-of-goods excuses question, remember that Article 2 is not a complete code. Under UCC § 1-103(b), common-law doctrines like frustration of purpose supplement the UCC unless displaced—and here Rivera confirms frustration applies. Seller should not recover. Buyer's principal purpose was to sell the hats at Riverfest, a purpose Seller knew. The city's unexpected cancellation substantially frustrated that purpose, and nothing shows either party assumed the risk of cancellation. The contract's silence on cancellation does not place the risk on Buyer; it means no allocation was made, so the basic-assumption analysis controls. Because the doctrine is available and the facts satisfy it, Buyer is discharged. The distractor that Article 2 completely codifies excuses is wrong because § 1-103(b) explicitly allows supplemental principles. The distractor that Buyer could still pay and resell elsewhere misses the point: frustration tests whether the known principal purpose was defeated, not whether performance is physically or financially possible—and these were custom Riverfest hats with no meaningful resale market. The distractor that Buyer should have included a cancellation clause also fails: failing to bargain for a term is not the same as assuming the risk of an event that destroys the contract's very purpose. Strategy: on bar-exam questions, when a seller knows the buyer's specific purpose and an unforeseeable event kills that purpose, check frustration of purpose before relying on strict UCC performance rules.

Question 12

Shortly after a restaurant supply company contracted to sell a restaurant owner 20 commercial refrigerators, the city adopted a health code regulation prohibiting the use of that model of refrigerator for storing uncured meat. The supply company knew the refrigerators were for the owner's walk-in meat cooler, and the owner's business consists almost entirely of selling uncured meat. The refrigerators remain lawful to buy, sell, and use for storing other foods. The restaurant owner refuses to accept delivery.

Which legal doctrine would the restaurant owner most likely rely on as a defense to the supply company's breach claim?

  1. Illegality
  2. Commercial impracticability
  3. Frustration of purpose (correct answer)
  4. Anticipatory repudiation
Explanation: Whenever you see a buyer refusing performance because of a changed law or circumstance after contract formation, think about the excuse doctrines: commercial impracticability and frustration of purpose. Both respond to supervening events, but the key distinction is what was affected — the performance itself or the purpose behind the contract. Here, the seller can still deliver the refrigerators, so performance is not impracticable. The problem is the buyer's known principal purpose: storing uncured meat in a walk-in cooler. The city regulation directly destroys that purpose, andthe seller knew the buyer's business consisted almost entirely of uncured meat. Even though the refrigerators remain lawful to buy, sell, and for other foods, the buyer's expected benefit from the deal is substantially gone. That is impotent frustration of purpose, a classic excuse. Illegality is tempting but wrong: the contract itself is lawful, andthe refrigerators may still be used legally for other foods. A regulation making one intended use unlawful does not make the contract illegal. Commercial impracticability is also wrong because the seller's delivery obligation has not become exceedingly difficult or costly; only the value to the buyer has collapsed. Anticipatory repudiation describes a party's clear refusal to perform before performance is due, not an excuse for that refusal — it is the breach or threatened breach, not a defense to it. The rule to remember: ask whether the changed circumstance made performance harder (impracticability) or destroyed the buyer's reason for contracting(frustration). If the latter, frustration of purpose is your doctrine.