… The typical case in which impossibility or some related doctrine is invoked is one where, by reason of an unforeseen or at least unprovided-for event, performance by one of the parties of his obligations under the contract has become so much more costly than he foresaw at the time the contract was made as to be uneconomical (that is, the costs of performance would be greater than the benefits). The performance promised may have been delivery of a particular cargo by a specified delivery date – but the ship is trapped in the Suez Canal because of a war between Israel and Egypt. Or it may have been a piano recital by Gina Bachauer – and she dies between the signing of the contract and the date of the recital. The law could in each case treat the failure to perform as a breach of contract, thereby in effect assigning to the promisor the risk that war, or death, would prevent performance (or render it uneconomical). Alternatively, invoking impossibility or some related notion, the law could treat the failure to perform as excusable and discharge the contract, thereby in effect assigning the risk to the promisee.

From the standpoint of economics – and disregarding, but only momentarily, administrative costs – discharge should be allowed where the promisee is the superior risk bearer; if the promisor is the superior risk bearer, nonperformance should be treated as a breach of contract. “Superior risk bearer” is to be understood here as the party that is the more efficient bearer of the particular risk in question, in the particular circumstances of the transaction.