What Happens If a Contract Contains Terms That Are Impossible to Fulfill?
The Doctrine of Impossibility Applies to Contracts Containing Terms That Were Impossible When a Purported Contract Was Made; However, Where Terms Are Impossible the Terms of Invalid and Unenforceable. A Contract With Terms That Become Impossible Differs and Is Known As a Frustrated Contract.
Understanding What Happens When a Contract Is Impossible to Perform and Becomes Unenforceable
When a contract contains clauses imposing duties to perform that are impossible to perform such clauses are unenforceable and if such clauses involve the full substance of the contract, the law may deem that a contract fails to exist. It may appear surprising; however, contracts may indeed be, apparently, negotiated with little concern given to the actual meaning of certain terms and whether the terms are even possible to perform.
At first glance it may appear absurd that a contract would be drafted with language that requires a party to the contract to perform impossible feats; however, such a circumstance happens all too often. Here are just a few examples of impossibilities whereas all are from a contract drafted and proferred by a major corporation, Loblaw Properties Limited, in respect of winter snow services:
9.(c) ... remove any debris, dirt, hazardous substances, pollutants, or other undesirable substances ...
9.(d) ... not bring any hazardous substances, pollutants, or other undesirable substances on or into the properties
10. ... salt ... shall be of a non-corroding type
The clauses above are suggested as impossible to perform as either so impractical as to make the clauses plainly and obviously impossible or outright made an impossibility due to the laws of physics. Per the examples above, the impossibility problem with clause 9.(c) is the condition to "... remove any debris, dirt ..." whereas the contract, being a winter snow services contract, also required that the contract apply salt and sand. It is plainly and obviously impractical and useless for a contract to include the requirement of applying salt and sand while also requiring the removal of any debris or dirt. The impossibility problem with clause 9.(d) involves the requirement to refrain from bringing hazardous substances on or into the properties whereas snow maintenance equipment, such as trucks with plows, will contain hydraulic fluids, fuels, and oils, that are hazardous substances. The 9.(d) clause implies that the truck or equipment required to perform the snow services be operated without fluids, fuels, or oils, which is an impossibility. Lastly, clause 10 would require a complete violation of the laws of physics or chemistry as salt is inherently a corrosive.
Impossible Versus Frustrated
At first glance, the doctrine of impossibility may appear redundant with the doctrine of frustration; however, the difference is that with the doctrine of frustration an incident outside the control of the parties, that occurs after the contract was made, makes the contract impossible to perform and with the doctrine of impossibility the contract is inherently impossible to perform from the very beginning and without any outside force required. The Federal Court specifically stated the difference between an impossible contract and a frustrated contract, albeit using different words, in the case of Saxe & Arghibald v. The King, 1921 CanLII 392 where it was said:
Coming to the question of impossibility of performance we must first distinguish the question of possibility of performance of a thing promised as a condition precedent to the duty of the promisor. When such performance is legally or physically impossible at the time the promise is made, no duty arises, not even a liability to a duty. In such case the acceptance is an inoperative fact and we should say that no contract is formed. But when the impossibility arises subsequently to the acceptance, the existing liability (or conditional duty) is discharged. Anson, on Contract 427, 428. Pollock on Contracts, 8th ed. 437, 439, 442.
Interestingly, modern cases often state or imply that the doctrine of impossibility and the doctrine of frustration are one and the same; however, per Saxe, where the impossibility arises after the contract was formed the parties are discharged from the duty of performance; but, where the impossibility existed at the time the contract was purportedly established such is actually a failed contract without duties owing and therefore without duties requiring discharge.
In modern law, the doctrine of frustration is codified within the Frustrated Contracts Act, R.S.O. 1990, c. F.34 which speaks to contracts that "become" impossible and a resulting discharge of obligations thereunder. Specifically, the Frustrated Contracts Act states:
2 (1) This Act applies to any contract that is governed by the law of Ontario and that has become impossible of performance or been otherwise frustrated and to the parties which for that reason have been discharged.
Emphasis is Added by Underline
Accordingly, and despite modern case law references suggesting otherwise, the doctrine of impossibility and the doctrine of frustration should appear as legal cousins rather than as legal twins.
An impossible clause within a contract is unenforceable. Furthermore, if a contract is substantially impossible to perform from the outset, then the law views the purported contract as failing to exist where a binding contract must contain terms requiring the performance of something possible. The doctrine of impossibility differs from the doctrine of frustration in that an impossible contract is one that was impossible from inception and a frustrated contract becomes impossible afterward.