Impracticability

Abstract

The principle of pacta sund servanda requires that agreements must be kept. However such rule is not absolute. When performance of a contractual obligation becomes impracticable, i.e., considerably more burdensome (expensive) than originally contemplated –albeit physically possible- due to an unexpected event, this would lead to adaptation of the contract to the changed circumstances or to avoidance of the contract. In the law and economics literature, impracticability has been substantially studied to figure out who should bear the risk of impracticability; and what would be the efficient remedy for such breach of contract.