Does Oregon excuse performance when the event the clause was meant to cover happens, or when the contract has no force majeure clause?
Oregon has no general force majeure statute; what it has is a default excuse rule for sales of goods and an older common-law doctrine. For goods, except so far as a seller has assumed a greater obligation and subject to ORS 72.6140 on substituted performance, delay in delivery or nondelivery in whole or in part by a seller who complies with ORS 72.6150(2) and (3) is not a breach 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 an applicable foreign or domestic governmental regulation or order whether or not it later proves invalid; a seller so affected in part must allocate production and deliveries fairly and reasonably among customers, and must notify the buyer seasonably of the delay, nondelivery or quota (72.6150). Where the agreed berthing, loading or unloading facilities fail, the agreed carrier becomes unavailable, or the agreed manner of delivery otherwise becomes commercially impracticable, a commercially reasonable substitute must be tendered and accepted (72.6140(1)); and where the agreed means or manner of payment fails because of a governmental regulation, the seller may withhold or stop delivery unless the buyer provides a commercially substantially equivalent means or manner of payment, while payment in the manner the regulation provides discharges a buyer that has already taken delivery unless the regulation is discriminatory, oppressive or predatory (72.6140(2)). On notice of a material or indefinite delay or an allocation, the buyer may terminate the unexecuted portion or take the available quota in substitution (72.6160(1)), and 72.6160's provisions may not be negated by agreement except so far as the seller has assumed a greater obligation under 72.6150. A buyer that does nothing loses the choice: if the buyer does not modify the contract within a reasonable time not exceeding 30 days after the seller's notification, the contract lapses as to any deliveries affected (72.6160(2)). Outside the sale of goods, the Oregon Supreme Court has stated the doctrine of supervening impossibility of performance: where the parties contract on the assumption that some particular thing necessary to performance will continue to exist and be available, and neither agrees to be responsible for its continued existence and availability, the contract is subject to the implied condition that if that thing ceases to exist or be available before the time for performance, without the default of either party, the contract is dissolved and the parties excused. That doctrine is stated as an exception: the common-law starting point the court gave is that a tenant remains liable for the agreed rent so long as any part of the premises remains in existence capable of being occupied or enjoyed, irrespective of injury or destruction by fire or other casualty. Applying the authorities it had set out to the lease before it, the court found that the destruction of the buildings and service station equipment by fire worked a termination of the original lease and the sublease, so the landlord was lawfully entitled to possession (Eggen v. Wetterborg, 1951).
The trap
In a sale of goods the seller's excuse is conditioned on performing 72.6150(2) and (3): a seller who does not allocate fairly among customers, or does not give the buyer seasonable notice of the delay, nondelivery or quota, is outside the section. The doctrine stated in Eggen turns on the parties not having allocated the risk: it applies only where neither party agreed to be responsible for the thing's continued existence and availability, so a clause that assigns that risk displaces it, and the common-law rule the court stated runs the other way, leaving a tenant liable for rent despite destruction by fire so long as any part of the premises can still be occupied or enjoyed. Nothing quoted in this rule states how an express force majeure clause is construed in Oregon, or whether commercial impracticability excuses performance outside a sale of goods.
11 authorities
- statuteORS 72.6150enactment 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 subsections (2) and (3) of this section is not a breach of 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.
- statuteORS 72.6150enactment date not established
The words that state the rule
Where the causes mentioned in subsection (1) of this section affect only a part of the seller’s capacity to perform, the seller must allocate production and deliveries among customers but may at the option of the seller include regular customers not then under contract as well as the requirements of the seller for further manufacture. The seller may so allocate in any manner which is fair and reasonable.
- statuteORS 72.6150enactment 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 subsection (2) of this section, of the estimated quota thus made available for the buyer.
- statuteORS 72.6140enactment date not established
The words that state the rule
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.
- statuteORS 72.6140enactment date not established
The words that state the rule
If the agreed means or manner of payment fails because of domestic or foreign governmental regulation, the seller may withhold or stop delivery unless the buyer provides a means or manner of payment which is commercially a substantial equivalent. If delivery has already been taken, payment by the means or in the manner provided by the regulation discharges the buyer’s obligation unless the regulation is discriminatory, oppressive or predatory.
- statuteORS 72.6160enactment date not established
The words that state the rule
Where the buyer receives notification of a material or indefinite delay or an allocation justified under ORS 72.6150 the buyer may by written notification to the seller as to any delivery concerned, and where the prospective deficiency substantially impairs the value of the whole contract under the provisions of ORS 72.6120 relating to breach of installment contracts, then also as to the whole: (a) Terminate and thereby discharge any unexecuted portion of the contract; or (b) Modify the contract by agreeing to take the available quota in substitution.
- statuteORS 72.6160enactment date not established
The words that state the rule
If after receipt of such notification from the seller the buyer fails so to modify the contract within a reasonable time not exceeding 30 days the contract lapses with respect to any deliveries affected.
- statuteORS 72.6160enactment date not established
The words that state the rule
The provisions of this section may not be negated by agreement except in so far as the seller has assumed a greater obligation under ORS 72.6150.
The words that state the rule
According to the common law, a tenant remains liable for the agreed rent of demised premises so long as any part thereof remains in existence capable of being occupied or enjoyed by him, irrespective of injury or destruction by fire or other casualty.
The words that state the rule
However, there are well-recognized exceptions to this rule. When parties enter into a contract on the assumption that some particular thing necessary to its *153 performance will continue to exist and be available for the purpose, and neither party agrees to be responsible for its continued existence and availability, the contract must be regarded as subject to the implied condition that, if before the time for performance, and without the default of either party, the particular thing ceases to exist or be available for the purpose, the contract shall be dissolved and the parties excused from performing it. This doctrine is known in this country as “supervening impossibility of performance.”
The words that state the rule
In the light of the authorities hereinabove mentioned, as applied to the situation in the instant case, we find that the destruction of the buildings and service station equipment by the fire in question worked a termination of the original lease, and, of course, the sublease. Upon such termination the landlord was lawfully entitled to possession. Judgment reversed.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.