Does our force majeure clause excuse performance under Kansas law?
For a sale of goods, K.S.A. 84-2-615 supplies a seller's excuse the clause does not have to create, and it opens with its own limits: "Except so far as a seller may have assumed a greater obligation and subject to the preceding section on substituted performance", delay in delivery or nondelivery in whole or in part by a seller who complies with paragraphs (b) and (c) is not a breach of the seller's duty 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 any applicable foreign or domestic governmental regulation or order whether or not it later proves to be invalid. Where the causes affect only part of the seller's capacity, the seller must allocate production and deliveries among its customers in any manner which is fair and reasonable, and must notify the buyer seasonably of the delay or non-delivery and, where allocation is required, of the estimated quota made available to that buyer. The section the excuse is expressly subject to carries its own command: where without fault of either party the agreed berthing, loading or unloading facilities fail, an agreed type of carrier becomes unavailable, or the agreed manner of delivery otherwise becomes commercially impracticable, but a commercially reasonable substitute is available, "such substitute performance must be tendered and accepted" (K.S.A. 84-2-614(1)).
The trap
The statutory excuse is conditional and one-sided on the section's words. It runs to a SELLER, and only to a seller "who complies with paragraphs (b) and (c)": fair and reasonable allocation and seasonable notice are conditions of the excuse, not courtesies. A clause by which the seller assumes a greater obligation takes the case outside the section by its opening words, so a promise to deliver whatever happens is a contracting-out. And nothing in K.S.A. 84-2-615 excuses a buyer, or a party to a contract that is not a sale of goods. Outside article 2 the doctrine Kansas states is frustration of purpose, and it is the Restatement's: the decision that states it is a plea-agreement case, Kansas applying contract principles to plea agreements, and the party invoking the doctrine there LOST: in State v. Boley the Supreme Court set out Restatement (Second) of Contracts § 265, that where a party's principal purpose is substantially frustrated without its fault by the occurrence of an event the non-occurrence of which was a basic assumption on which the contract was made, "his remaining duties to render performance are discharged, unless the language or the circumstances indicate the contrary", and then applied three elements from comment a: that the frustrated purpose was "so completely the basis of the contract that . . . without it the transaction would make little sense", that "the frustration must be substantial" and "so severe that it is not fairly to be regarded as within the risks . . . assumed under the contract", and that the "nonoccurrence of the frustrating event must have been a basic assumption on which the contract was made." That second element is where the argument died in Boley itself: "It is not enough that the transaction has become less profitable for the affected parly or even that [it] will sustain a loss." The State "does not meet the second element of the frustration of purpose doctrine because the frustration was not “so severe”"; the risk it complained of "was foreseeable and, admittedly, foreseen"; and the Court concluded that "the elements of the frustration of purpose doctrine were not met under the facts of this case." The drafting lesson is in the same passage: the party who bore the risk "could have protected against this risk by including a provision" dealing with it, which is what a force-majeure clause is for.
11 authorities
- statuteK.S.A. 84-2-615enactment 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: (a) Delay in delivery or nondelivery in whole or in part by a seller who complies with paragraphs (b) and (c) is not a breach of his 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 any applicable foreign or domestic governmental regulation or order whether or not it later proves to be invalid.
- statuteK.S.A. 84-2-615enactment date not established
The words that state the rule
Where the causes mentioned in paragraph (a) affect 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.
- statuteK.S.A. 84-2-615enactment date not established
The words that state the rule
The seller must notify the buyer seasonably that there will be delay or non-delivery and, when allocation is required under paragraph (b), of the estimated quota thus made available for the buyer.
The words that state the rule
The frustration of purpose doctrine is stated in the Restatement (Second) of Contracts § 265 (1979): “Where, after a contract- is made, a party’s principal purpose is substantially frustrated without his fault by the occurrence of an event the non-occurrence of which was a basic assumption on which the contract was made, his remaining duties to render performance are discharged, unless the language or the circumstances indicate the contrary.”
The words that state the rule
The first step in applying the doctrine is to determine whether the frustrated purpose was “so completely the basis of the contract that . . . without it the transaction would make little sense.” Restatement (Second) of Contracts § 265, comment a.
The words that state the rule
The Restatement defines the second element of the doctrine by stating: “[T]he frustration must be substantial. It is not enough that the transaction has become less profitable for the affected parly or even that [it] will sustain a loss. The frustration must be so severe that it is not fairly to be regarded as within the risks . . . assumed under the contract.” Restatement (Second) of Contracts § 265, comment a.
The words that state the rule
The third and final element of the doctrine is that the “nonoccurrence of the frustrating event must have been a basic assumption on which the contract was made.” Restatement (Second) of Contracts § 265, comment a.
The words that state the rule
Thus, the State does not meet the second element of the frustration of purpose doctrine because the frustration was not “so severe” that it is fairly regarded as within the risks assumed under the contract. Restatement (Second) of Contracts § 265, comment a.
The words that state the rule
The risk that Boley could only be sentenced to the lesser penalty was foreseeable and, admittedly, foreseen. Thus, contraiy to the Boley Court of Appeals’ holding, we conclude that the elements of the frustration of purpose doctrine were not met under the facts of this case.
The words that state the rule
The prosecutor could have protected against this risk by including a provision in the plea agreement requiring the defendant to waive his right to appeal or indicating that if the defendant successfully challenged his sentence, such action would be considered a breach of the agreement.
- statuteK.S.A. 84-2-614enactment date not established
The words that state the rule
(1) Where 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, such substitute performance must be tendered and accepted.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.