Assignment 69
Northern Corp. v. Chugach Electrical Assoc.
FACTS:
Northern entered into a contract with Chugach to repair and upgrade the Cooper Lake Dam. To fulfill
this agreement, Northern was required to transport rock from a quarry at the other side of the lake and
transport it to the dam during winter across the frozen lake. In March 1967, one of Northern’s trucks
broke though the ice and sank. Two other trucks broke through the ice resulting in the deaths of the
drivers. Northern notified Chugach it would make no more attempts to drive across the lake and that
they believed the contract was terminated because of impossibility of performance. Northern than filed
suit to recover the costs incurred while trying to complete the un-completable task.
ISSUE:
Was the contract impossible of performance?
DECISION:
Judgment in favor of Northern.
DISCUSSION:
The contract specified that the rock would be hauled across the lake when it was frozen to a sufficient
depth to permit heavy vehicle traffic. It was clear from this agreement, that the parties thought that the
rack would be transported across the frozen lake by truck. This method of transport relied upon the fact
that there would be or could be enough frozen ice to safely support trucks full of rocks. This expectation
was never fulfilled, and this materially affected the performance of the task, Northern’s duty to perform
was discharged by reason of impossibility. Additionally, the task was found to be commercially
impractical, which by law excuses a party from a contract if the cost of performance would be so
disproportionate to that reasonably contemplated by the parties as to make the contract totally
impractical in a commercial sense. Commercial impracticability does not require that the task be
technically impossible to be performed by anyone.
RULES OF LAW:
Contract obligations can be discharged if the task is impossible to be performed by anyone or if the
performance can be accomplished only under unforeseen and unjust hardship through Commercial
Impracticability.