Will this force-majeure / impossibility clause excuse late or non-performance under Alaska law?
Yes, on two separate legal tracks that both land on the same substantive test. For a sale of goods, Alaska's UCC codifies the excuse directly: a seller's delay or nondelivery "is not a breach of the seller's duty under a contract for sale if performance as agreed has been made impracticable by the occurrence of a contingency, the nonoccurrence of which was a basic assumption on which the contract was made" or by good-faith compliance with a governmental regulation or order (AS 45.02.615(1)). For contracts generally, not limited to goods, Alaska's common law recognizes the same substantive idea under the banner of "commercial impracticability": Northern Corporation v. Chugach Electric Ass'n holds that "Alaska has adopted the Restatement doctrine whereby commercial impracticability may under certain circumstances justify regarding a contract as impossible to perform," discharging a party from its contract obligations, even where performance is technically possible, "if the costs of performance would be so disproportionate to that reasonably contemplated by the parties as to make the contract totally impractical in a commercial sense."
The trap
AS 45.02.615's excuse is qualified twice before it begins. It applies "[e]xcept so far as a seller may have assumed a greater obligation": a seller who contractually took on the risk of the very contingency that occurred gets no statutory excuse. It is also "subject to the preceding section on substituted performance," AS 45.02.614, and that section is mandatory the other way: where the agreed berthing, loading or carriage fails or the agreed manner of delivery "otherwise becomes commercially impracticable but a commercially reasonable substitute is available, the substitute performance must be tendered and accepted." A clause that recites impracticability does not excuse a seller who could have substituted. The statutory excuse also comes with affirmative duties the clause does not waive on its own: if the contingency affects only part of the seller's capacity, the seller must allocate production fairly and reasonably among customers (AS 45.02.615(2)), and must seasonably notify the buyer of the delay or nondelivery and, where allocation applies, of the buyer's estimated quota (AS 45.02.615(3)): silence can forfeit the excuse even where impracticability genuinely exists. On the common-law side, Northern Corp.'s test requires costs "so disproportionate" to what was contemplated as to be "totally impractical in a commercial sense": nothing read here quantifies that threshold, and ordinary cost increases or unprofitability, without more, are not shown by this authority to qualify. Note also what discharge bought the excused party in Northern Corp.: the owner that kept insisting on the impossible performance was "held liable for Northern's increased costs incurred after such time as Chugach was reasonably placed on notice" that the agreed method was not feasible, so an excuse clause can shift cost onto the party demanding performance rather than merely ending the deal.
7 authorities
- statuteAS 45.02.615enactment date not established
The words that state the rule
Except so far as a seller may have assumed a greater obligation and subject to the preceding section on substituted performance, (1) delay in delivery or nondelivery in whole or in part by a seller who complies with (2) and (3) of this section is not a breach of the seller's duty under a contract for sale if performance as agreed has been made impracticable by the occurrence of a contingency, the nonoccurrence of which was a basic assumption on which the contract was made or by compliance in good faith with an applicable foreign or domestic governmental regulation or order whether or not it later proves to be invalid;
- statuteAS 45.02.615enactment date not established
The words that state the rule
if the causes mentioned in (1) of this section affect only a part of the seller's capacity to perform, the seller must allocate production and deliveries among the seller's customers, but may at the seller's option include regular customers not then under contract as well as the seller's own requirements for further manufacture; the seller may so allocate in a manner that is fair and reasonable;
- statuteAS 45.02.615enactment date not established
The words that state the rule
the seller must notify the buyer seasonably that there will be delay or nondelivery and, when allocation is required under (2) of this section, of the estimated quota thus made available for the buyer.
- statuteAS 45.02.614enactment date not established
The words that state the rule
If without fault of either party the agreed berthing, loading, or unloading facilities fail or an agreed type of carrier becomes unavailable or the agreed manner of delivery otherwise becomes commercially impracticable but a commercially reasonable substitute is available, the substitute performance must be tendered and accepted.
- case518 P.2d 76Northern Corporation v. Chugach Electric Ass'nAlaskadecided 1974read it at the source ↗
The words that state the rule
Alaska has adopted the Restatement doctrine whereby commercial impracticability may under certain circumstances justify regarding a contract as impossible to perform.
- case518 P.2d 76Northern Corporation v. Chugach Electric Ass'nAlaskadecided 1974read it at the source ↗
The words that state the rule
a party is discharged from his contract obligations, even if it is technically possible to perform them, if the costs of performance would be so disproportionate to that reasonably contemplated by the parties as to make the contract totally impractical in a commercial sense.
- case518 P.2d 76Northern Corporation v. Chugach Electric Ass'nAlaskadecided 1974read it at the source ↗
The words that state the rule
Despite the fact that no change order was actually issued by Chugach, we hold that it should be held liable for Northern’s increased costs incurred after such time as Chugach was reasonably placed on notice that it was not feasible to perform the contract by means of the ice haul method.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.