The Contract Risk Allocation Toolkit

Commercial > Contract Risk Allocation | Published 4 June 2024 - Updated 15 February 2026 | UpLaw - uplaw.us

In brief. Ask the same question at every provision: who bears this risk, and who funds it? Force majeure, impracticability, indemnity, damage caps, liquidated damages, conditions, and insurance are seven answers to one question, and they must be read together. The clause that decides your case is usually not the one you are looking at.

Keywords: force majeure, ejusdem generis, § 2-615, Restatement § 261, frustration, change in law, MAE, indemnity, duty to defend, anti-indemnity, LoL, consequential damages, LDs, conditions, sandbagging, insurance

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How This Toolkit Is Organized

Ten pillars, each giving the doctrine, the anchors, the trap and its second order consequence, and where to go deeper. Then the authority shelf, then two appendices: an event-to-device decision matrix and a comparison of the excuse doctrines.

The narrative entry point is Force Majeure After the Pandemic: What Actually Excuses Performance. The doctrinal treatment is Force Majeure, Impossibility, and Excuse: A Comprehensive Guide to Contract Performance Under Disruption. The operational sequence is Negotiating Indemnity and Limitation of Liability Clauses: A Practical Checklist.

Running parties throughout: Marrowbone Foundry, Inc. (fictional), a castings supplier; Calderwood Appliance Works (fictional), its customer; Redgate Alloys S.A. (fictional), its sole alloy source; Brightwater Regional Water Authority (fictional), a public owner; Pelham Ridge Partners (fictional), a prospective acquirer; and Kestrel Mutual Casualty Company (fictional), Marrowbone's insurer.

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Pillar 1 — Force Majeure as a Creature of Contract

Doctrine. In every American jurisdiction but Louisiana, force majeure is not a background doctrine — it is a clause, and it excuses only what its own words excuse. Courts construe such clauses narrowly, and a general catchall is confined to events of the same kind as those enumerated.

Anchors. Kel Kim Corp. v. Central Markets, Inc., 70 N.Y.2d 900 (1987) (narrow construction; catchall limited to the genus of the list). Route 6 Outparcels, LLC v. Ruby Tuesday, Inc., 88 A.D.3d 1224 (3d Dep't 2011) (economic downturn not covered). TEC Olmos, LLC v. ConocoPhillips Co., 555 S.W.3d 176 (Tex. App.—Houston [1st Dist.] 2018, pet. denied) (foreseeability gloss on broad catchalls). Sun Operating Ltd. P'ship v. Holt, 984 S.W.2d 277 (Tex. App.—Amarillo 1998, pet. denied) (clause supplants the common law). JN Contemporary Art LLC v. Phillips Auctioneers LLC, 507 F. Supp. 3d 490 (S.D.N.Y. 2020), aff'd, 29 F.4th 118 (2d Cir. 2022) (enumerated "natural disaster" reached the pandemic).

Trap. Leading with the catchall. It tells the court you could not satisfy the list, and under Kel Kim the catchall will be read down to the genus of the list anyway. Find the closest enumerated term and argue it.

Trap, second order. A stale list. Clauses drafted before 2015 rarely name pandemic, public health emergency, cyberattack, ransomware, sanctions, export controls, or tariffs — the risks that have actually caused disruption since. A list is a snapshot of what a drafter feared in a particular year, and the omissions are read as deliberate allocations.

Go deeper: Guide Part II · Article Parts I–II

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Pillar 2 — Causation, Notice, and Mitigation

Doctrine. Even a qualifying event excuses nothing unless it caused the non-performance to the degree the clause requires, and unless the claimant satisfied the clause's conditions — notice, content, form, updates, and mitigation.

Anchors. Northern Indiana Public Service Co. v. Carbon County Coal Co., 799 F.2d 265 (7th Cir. 1986) (a force majeure clause "is not intended to buffer a party against the normal risks of a contract"). Lantino v. Clay LLC, 2020 WL 2239957 (S.D.N.Y. May 8, 2020) (inability to pay is not excuse). In re Hitz Restaurant Group, 616 B.R. 374 (Bankr. N.D. Ill. 2020) (proportional relief under "hindrance" language). Oppenheimer & Co. v. Oppenheimer, Appel, Dixon & Co., 86 N.Y.2d 685 (1995) (express conditions require literal compliance); compare Jacob & Youngs, Inc. v. Kent, 230 N.Y. 239 (1921). Restatement (Second) of Contracts §§ 227, 229 (1981) (avoiding forfeiture). U.C.C. § 2-614 (commercially reasonable substitute performance).

Trap. Sending notice to the commercial contact instead of the named recipient at the contractual address. Sophisticated agreements contain several notice provisions with different recipients and methods, and a force majeure notice sent under the wrong one is defective. Calendar the deadline the day the event is identified and follow the strictest provision.

Trap, second order. Informal accommodation. A supplier that quietly ships partial volumes for two months while negotiating a "commercial solution" may have waived the excuse, conceded capability, and started the buyer's cover-damages clock. Send the notice first, then negotiate — and build the mitigation file contemporaneously, because a file assembled after the complaint is filed persuades nobody.

Go deeper: Guide Part III · Checklist Phases 3, 10

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Pillar 3 — Impossibility and Impracticability

Doctrine. Without a clause, a promisor is discharged only if an event made performance impracticable, the non-occurrence of that event was a basic assumption of the contract, the promisor is without fault, and neither the language nor the circumstances allocated the risk to it.

Anchors. Restatement (Second) of Contracts §§ 261–266, 269, 272 (1981). U.C.C. § 2-615 (excuse by failure of presupposed conditions; allocation; notice); § 2-613 (casualty to identified goods); § 2-616 (buyer's election). Paradine v. Jane, 82 Eng. Rep. 897 (K.B. 1647); Taylor v. Caldwell, 3 B. & S. 826 (K.B. 1863). Transatlantic Financing Corp. v. United States, 363 F.2d 312 (D.C. Cir. 1966); American Trading & Production Corp. v. Shell International Marine Ltd., 453 F.2d 939 (2d Cir. 1972); Eastern Air Lines, Inc. v. Gulf Oil Corp., 415 F. Supp. 429 (S.D. Fla. 1975); United States v. Wegematic Corp., 360 F.2d 674 (2d Cir. 1966). Canadian Industrial Alcohol Co. v. Dunbar Molasses Co., 258 N.Y. 194 (1932); Selland Pontiac-GMC, Inc. v. King, 384 N.W.2d 490 (Minn. Ct. App. 1986). Roth Steel Products v. Sharon Steel Corp., 705 F.2d 134 (6th Cir. 1983) (allocation). CISG art. 79 for covered international sales.

Trap. Treating unprofitability as impracticability. Comment 4 to § 2-615 is explicit that "a rise or a collapse in the market is not in itself a justification," and the Suez cases hold that cost increases of 14 to 33 percent do not excuse. No court has fixed a percentage, and counsel who give a client one are inventing it.

Trap, second order. The unnamed source. A seller whose contract does not identify its supplier bears the risk of that supplier's failure under Dunbar Molasses; a seller whose contract names the source may be excused under Selland. That single drafting choice, made years before any disruption, decides the case — and buyers should keep the source out of the contract for exactly that reason.

Go deeper: Guide Parts IV–V

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Pillar 4 — Frustration of Purpose

Doctrine. Where a party's principal purpose is substantially frustrated by an event whose non-occurrence was a basic assumption, its remaining duties are discharged — but only if the frustration is near total, the party is without fault, and the risk was not allocated to it.

Anchors. Restatement (Second) of Contracts § 265 (1981). Krell v. Henry, [1903] 2 K.B. 740. Lloyd v. Murphy, 25 Cal. 2d 48 (1944) (Traynor, J.). Karl Wendt Farm Equipment Co. v. International Harvester Co., 931 F.2d 1112 (6th Cir. 1991) (profit is not the "principal purpose"). Chase Precast Corp. v. John J. Paonessa Co., 409 Mass. 371 (1991). 20th Century Lites, Inc. v. Goodman, 64 Cal. App. 2d Supp. 938 (1944). Pandemic line: UMNV 205-207 Newbury, LLC v. Caffé Nero Americas Inc., 2021 WL 956069 (Mass. Super. Ct. Feb. 8, 2021) (granted); Valentino U.S.A., Inc. v. 693 Fifth Owner LLC, 203 A.D.3d 480 (1st Dep't 2022) and Gap Inc. v. 170 Broadway Retail Owner, LLC, 195 A.D.3d 575 (1st Dep't 2021) (denied); Fitness Int'l, LLC v. KB Salt Lake III, LLC, 79 Cal. App. 5th 503 (2022) (denied).

Trap. Pleading frustration where the loss is economic. Frustration is not a profitability doctrine. It succeeds in one recognizable pattern: a narrow contractual use restriction plus a supervening legal prohibition of exactly that use, with no contrary risk allocation.

Trap, second order. Drafting a use clause more narrowly than the tenant or licensee needs. A permitted-use provision limited to one activity is a covenant the counterparty wanted — and, when that activity becomes unlawful, the very thing that supports frustration. Landlords and licensors who insist on narrow use clauses are handing their counterparties an excuse doctrine.

Go deeper: Guide Part VI

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Pillar 5 — Government Action and Change in Law

Doctrine. Government orders are the most frequent real-world excuse trigger, and they travel through four routes: an enumerated force majeure event, prevention by regulation or order under Restatement § 264, § 2-615's good-faith-compliance prong, and illegality. A negotiated change-in-law clause is better than all of them.

Anchors. Restatement (Second) of Contracts § 264, and §§ 178–179 (unenforceability on public policy grounds) (1981). U.C.C. § 2-615(a) (compliance with a governmental regulation or order "whether or not it later proves to be invalid"). Horowitz v. United States, 267 U.S. 458 (1925) (sovereign acts). United States v. Winstar Corp., 518 U.S. 839 (1996) (the government may contractually assume regulatory-change risk; sovereign acts defense unavailable where the act targets its own obligations).

Trap. Burying change in law inside force majeure. Force majeure produces suspension; what a party facing a new tariff, sanction, or permitting regime needs is a price adjustment. A suspension right gives the affected party nothing it wants and gives the counterparty a termination argument.

Trap, second order. Drafting a change-in-law definition that reaches only new statutes and regulations. The costly changes are frequently changes in interpretation or enforcement by an agency applying an unchanged rule, and tariffs imposed by executive action. A definition that omits those has excluded the most likely events, and a "renegotiate in good faith" obligation without a formula is an agreement to agree.

Go deeper: Guide Part VIII · The Rules of the Game: How Federal Procurement Actually Works and Where Bidders Lose

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Pillar 6 — Material Adverse Change

Doctrine. In acquisition agreements, the MAE clause allocates the risk of deterioration between signing and closing, through a general standard, a list of exclusions, and a disproportionate-effect exception to the exclusions. The party asserting an MAE bears a heavy burden.

Anchors. IBP, Inc. v. Tyson Foods, Inc., 789 A.2d 14 (Del. Ch. 2001) ("durationally-significant" threat to overall earnings potential, viewed over years). Hexion Specialty Chemicals, Inc. v. Huntsman Corp., 965 A.2d 715 (Del. Ch. 2008). Akorn, Inc. v. Fresenius Kabi AG, 2018 WL 4719347 (Del. Ch. Oct. 1, 2018), aff'd, 198 A.3d 724 (Del. 2018) (first Delaware MAE finding). AB Stable VIII LLC v. MAPS Hotels & Resorts One LLC, 2020 WL 7024929 (Del. Ch. Nov. 30, 2020), aff'd, 268 A.3d 198 (Del. 2021). Snow Phipps Group, LLC v. KCAKE Acquisition, LLC, 2021 WL 1714202 (Del. Ch. Apr. 30, 2021). Channel Medsystems, Inc. v. Boston Scientific Corp., 2019 WL 6896462 (Del. Ch. Dec. 18, 2019).

Trap. Negotiating the MAE definition and ignoring the ordinary course of business covenant. AB Stable is the demonstration: the pandemic fell inside the MAE's calamities carve-out, so the buyer could not walk on that ground — and walked anyway, because the seller breached the ordinary-course covenant by closing hotels in response to the pandemic.

Trap, second order. An unqualified covenant makes compliance with government orders a breach. The fixes are structural: qualify by "commercially reasonable efforts," except actions required by law or reasonably taken in response to an emergency, and add a deemed-consent mechanism with a short fuse so interim-operating consents can be obtained on a crisis timetable.

Go deeper: Guide Part IX · Checklist Phase 7

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Pillar 7 — Indemnification and the Duty to Defend

Doctrine. An indemnity shifts loss, usually for third-party claims. A duty to defend is a distinct and broader obligation that arises earlier. Whether either reaches the indemnitee's own negligence depends on drafting clarity and on state statutes that void such shifts in construction and oilfield work.

Anchors. Hooper Associates, Ltd. v. AGS Computers, Inc., 74 N.Y.2d 487 (1989) (indemnity presumed to cover third-party claims; fees between the parties require "unmistakably clear" language). Crawford v. Weather Shield Manufacturing, Inc., 44 Cal. 4th 541 (2008), construing Cal. Civ. Code § 2778 (duty to defend arises on tender). Ethyl Corp. v. Daniel Construction Co., 725 S.W.2d 705 (Tex. 1987) (express negligence); Dresser Industries, Inc. v. Page Petroleum, Inc., 853 S.W.2d 505 (Tex. 1993) (conspicuousness). N.Y. Gen. Oblig. Law § 5-322.1; Brooks v. Judlau Contracting, Inc., 11 N.Y.3d 204 (2008) ("to the fullest extent permitted by law" saves partial indemnity); Itri Brick & Concrete Corp. v. Aetna Casualty & Surety Co., 89 N.Y.2d 786 (1997). Tex. Civ. Prac. & Rem. Code §§ 127.001–.007; La. Rev. Stat. § 9:2780.

Trap. Assuming a broad indemnity shifts attorney's fees in a dispute between the parties. Under Hooper it does not, and clients believe otherwise almost universally. If fee-shifting between the parties is intended, draft it as a fee-shifting clause and stop calling it indemnity.

Trap, second order. An indemnity that is not an "insured contract." Standard CGL forms exclude contractually assumed liability except assumption of another's tort liability to a third person. An indemnity covering the counterparty's own breach-of-contract losses sits outside that exception and is uninsured — a promise backed only by the indemnitor's balance sheet, which is exactly what nobody priced.

Go deeper: Guide Part X · Checklist Phases 4, 8

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Pillar 8 — Limitation of Liability and Consequential Damages

Doctrine. Parties may cap total exposure and exclude categories of damages, subject to unconscionability, failure of essential purpose, and public-policy floors for gross negligence and intentional wrongdoing.

Anchors. U.C.C. § 2-719 (exclusive remedies; failure of essential purpose; unconscionability); § 2-715 (consequential damages). Hadley v. Baxendale, 156 Eng. Rep. 145 (Ex. 1854). Biotronik A.G. v. Conor Medsystems Ireland, Ltd., 22 N.Y.3d 799 (2014) (resale lost profits were direct, not consequential). Chatlos Systems, Inc. v. National Cash Register Corp., 635 F.2d 1081 (3d Cir. 1980) (clauses independent). Kalisch-Jarcho, Inc. v. City of New York, 58 N.Y.2d 377 (1983) and Sommer v. Federal Signal Corp., 79 N.Y.2d 540 (1992) (no exculpation for gross negligence); Metropolitan Life Insurance Co. v. Noble Lowndes International, Inc., 84 N.Y.2d 430 (1994) ("willful" construed narrowly). Tunkl v. Regents of the University of California, 60 Cal. 2d 92 (1963).

Trap. A general cap that silently swallows a hard-won uncapped indemnity. The carve-out list is the negotiation, and the standard list — fraud, willful misconduct, personal injury and property damage, IP indemnity, confidentiality, data and privacy, payment obligations — should be settled before the cap number is.

Trap, second order. Relying on the word "consequential." Biotronik holds that lost profits can be direct damages when the contract's economics are built on them, so a waiver of "consequential damages including lost profits" may not bar the very loss it was written for. Enumerate the excluded categories and state that each is barred "whether direct, indirect, incidental, consequential, or otherwise" — and add that the exclusion survives any failure of essential purpose, because courts split on that question and one sentence resolves it.

Go deeper: Guide Part XI · Checklist Phase 5

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Pillar 9 — Liquidated Damages and Conditions Precedent

Doctrine. Stipulated damages are enforceable only if reasonable in light of anticipated or actual harm where actual loss is difficult to estimate; otherwise they are void as a penalty. Express conditions, by contrast, are enforced literally, and their non-occurrence discharges the duty entirely.

Anchors. Restatement (Second) of Contracts §§ 224–229, 356 (1981). U.C.C. § 2-718(1). Truck Rent-A-Center, Inc. v. Puritan Farms 2nd, Inc., 41 N.Y.2d 420 (1977); JMD Holding Corp. v. Congress Financial Corp., 4 N.Y.3d 373 (2005) (burden on the challenger). Cal. Civ. Code § 1671; Ridgley v. Topa Thrift & Loan Ass'n, 17 Cal. 4th 970 (1998). Brazen v. Bell Atlantic Corp., 695 A.2d 43 (Del. 1997) (termination fee upheld). Lake River Corp. v. Carborundum Co., 769 F.2d 1284 (7th Cir. 1985). Oppenheimer & Co. v. Oppenheimer, Appel, Dixon & Co., 86 N.Y.2d 685 (1995). Pay-if-paid: Wm. R. Clarke Corp. v. Safeco Insurance Co., 15 Cal. 4th 882 (1997); West-Fair Electric Contractors v. Aetna Casualty & Surety Co., 87 N.Y.2d 148 (1995).

Trap. A flat per-day or per-breach sum applied identically to trivial and catastrophic breaches. That is the classic penalty marker. Graduate the amount, cap the aggregate, and retain the contemporaneous calculation — the file created at drafting is the evidence that wins the reasonableness fight years later.

Trap, second order. The forfeiture nobody expects. If an exclusive LD clause is struck as a penalty, some courts award actual damages and others award nothing, reasoning that the parties displaced the default remedy. A two-line savings clause reverting to actual damages if the LD provision is held unenforceable eliminates the risk, and almost no template contains one.

Go deeper: Guide Parts XII–XIII · The Construction Law Toolkit

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Pillar 10 — Warranties, Sandbagging, and the Insurance Backstop

Doctrine. Representations, warranties, covenants, and conditions carry different remedies, and the label chosen at drafting decides what happens at breach. Whether a buyer who knew of a breach may still sue on it — sandbagging — is a jurisdiction-specific and often unresolved question. Behind all of it sits the insurance program, which determines whether an allocated risk is actually funded.

Anchors. CBS Inc. v. Ziff-Davis Publishing Co., 75 N.Y.2d 496 (1990) (pro-sandbagging in New York); Galli v. Metz, 973 F.2d 145 (2d Cir. 1992) (waiver where knowledge came from the seller and the buyer closed without reservation); Eagle Force Holdings, LLC v. Campbell, 187 A.3d 1209 (Del. 2018) (question flagged as open in Delaware). Abry Partners V, L.P. v. F&W Acquisition LLC, 891 A.2d 1032 (Del. Ch. 2006) and Prairie Capital III, L.P. v. Double E Holding Corp., 132 A.3d 35 (Del. Ch. 2015) (non-reliance). Burlington Insurance Co. v. New York City Transit Authority, 29 N.Y.3d 313 (2017) (additional-insured "caused by" requires proximate causation). Business interruption: Consolidated Restaurant Operations, Inc. v. Westport Insurance Corp., 40 N.Y.3d 415 (2023); Verveine Corp. v. Strathmore Insurance Co., 489 Mass. 534 (2022); Colectivo Coffee Roasters, Inc. v. Society Insurance, 2022 WI 36.

Trap. Silence on sandbagging. It converts a drafting choice into a choice-of-law question litigated years later, in a state whose rule may be unsettled. Pick a position and write it.

Trap, second order. A certificate of insurance instead of an endorsement. The certificate confers no rights and says so at the bottom. The additional-insured form number and edition date determine whether coverage is broad or nearly illusory, and post-2013 forms limit coverage to liability caused by the named insured, to the extent permitted by law, and to the amounts the contract required. Ask for the endorsement, before the first delivery.

Go deeper: Guide Parts XIII–XIV · Checklist Phases 7–8

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The Authority Shelf

Uniform laws and restatements

• Uniform Commercial Code Article 2, especially § 2-509 and § 2-510 (risk of loss), § 2-613, § 2-614, § 2-615, § 2-616, § 2-715, § 2-718, § 2-719; § 1-303 (course of performance, course of dealing, usage of trade); § 1-304 (good faith)
• Restatement (Second) of Contracts (1981), especially §§ 178–179 (public policy), 224–229 (conditions), 261–272 (impracticability and frustration), 351 (foreseeability), 356 (liquidated damages)
• Restatement of the Law, Liability Insurance (2019) — the duty to defend and allocation
• United Nations Convention on Contracts for the International Sale of Goods, art. 79; UNIDROIT Principles of International Commercial Contracts arts. 6.2.1–6.2.3 (hardship), 7.1.7 (force majeure)

State statutes

• N.Y. Gen. Oblig. Law § 5-322.1 (construction anti-indemnity); §§ 5-321, 5-323 (exculpation)
• Cal. Civ. Code § 2778 (indemnity interpretation); § 1671 (liquidated damages); § 2782 (construction anti-indemnity)
• Tex. Civ. Prac. & Rem. Code §§ 127.001–.007 (Oilfield Anti-Indemnity Act); ch. 151 (Construction Anti-Indemnity Act)
• La. Rev. Stat. § 9:2780 (Oilfield Indemnity Act)

Leading cases — excuse

• Paradine v. Jane, 82 Eng. Rep. 897 (K.B. 1647) · Taylor v. Caldwell, 3 B. & S. 826 (K.B. 1863) · Krell v. Henry, [1903] 2 K.B. 740 · Canadian Industrial Alcohol Co. v. Dunbar Molasses Co., 258 N.Y. 194 (1932) · Lloyd v. Murphy, 25 Cal. 2d 48 (1944) · Transatlantic Financing Corp. v. United States, 363 F.2d 312 (D.C. Cir. 1966) · United States v. Wegematic Corp., 360 F.2d 674 (2d Cir. 1966) · American Trading & Production Corp. v. Shell Int'l Marine Ltd., 453 F.2d 939 (2d Cir. 1972) · Mishara Constr. Co. v. Transit-Mixed Concrete Corp., 365 Mass. 122 (1974) · Eastern Air Lines, Inc. v. Gulf Oil Corp., 415 F. Supp. 429 (S.D. Fla. 1975) · Aluminum Co. of America v. Essex Group, Inc., 499 F. Supp. 53 (W.D. Pa. 1980) · Roth Steel Products v. Sharon Steel Corp., 705 F.2d 134 (6th Cir. 1983) · Northern Indiana Pub. Serv. Co. v. Carbon County Coal Co., 799 F.2d 265 (7th Cir. 1986) · Opera Co. of Boston v. Wolf Trap Found., 817 F.2d 1094 (4th Cir. 1987) · Kel Kim Corp. v. Central Markets, Inc., 70 N.Y.2d 900 (1987) · Chase Precast Corp. v. John J. Paonessa Co., 409 Mass. 371 (1991) · Karl Wendt Farm Equip. Co. v. International Harvester Co., 931 F.2d 1112 (6th Cir. 1991) · TEC Olmos, LLC v. ConocoPhillips Co., 555 S.W.3d 176 (Tex. App. 2018)

Leading cases — allocation devices

• Hadley v. Baxendale, 156 Eng. Rep. 145 (Ex. 1854) · Jacob & Youngs, Inc. v. Kent, 230 N.Y. 239 (1921) · Ryan Stevedoring Co. v. Pan-Atlantic S.S. Corp., 350 U.S. 124 (1956) · Tunkl v. Regents, 60 Cal. 2d 92 (1963) · Truck Rent-A-Center v. Puritan Farms 2nd, 41 N.Y.2d 420 (1977) · Chatlos Systems v. NCR Corp., 635 F.2d 1081 (3d Cir. 1980) · Kalisch-Jarcho, Inc. v. City of New York, 58 N.Y.2d 377 (1983) · Lake River Corp. v. Carborundum Co., 769 F.2d 1284 (7th Cir. 1985) · Ethyl Corp. v. Daniel Constr. Co., 725 S.W.2d 705 (Tex. 1987) · Hooper Assocs. v. AGS Computers, 74 N.Y.2d 487 (1989) · CBS Inc. v. Ziff-Davis Publ'g Co., 75 N.Y.2d 496 (1990) · Sommer v. Federal Signal Corp., 79 N.Y.2d 540 (1992) · Dresser Indus. v. Page Petroleum, 853 S.W.2d 505 (Tex. 1993) · Metropolitan Life Ins. Co. v. Noble Lowndes Int'l, 84 N.Y.2d 430 (1994) · Oppenheimer & Co. v. Oppenheimer, Appel, Dixon & Co., 86 N.Y.2d 685 (1995) · United States v. Winstar Corp., 518 U.S. 839 (1996) · Brazen v. Bell Atlantic Corp., 695 A.2d 43 (Del. 1997) · IBP, Inc. v. Tyson Foods, Inc., 789 A.2d 14 (Del. Ch. 2001) · Abry Partners V, L.P. v. F&W Acquisition LLC, 891 A.2d 1032 (Del. Ch. 2006) · Crawford v. Weather Shield Mfg., 44 Cal. 4th 541 (2008) · Hexion v. Huntsman, 965 A.2d 715 (Del. Ch. 2008) · Biotronik A.G. v. Conor Medsystems Ireland, Ltd., 22 N.Y.3d 799 (2014) · Burlington Ins. Co. v. NYC Transit Auth., 29 N.Y.3d 313 (2017) · Akorn v. Fresenius Kabi, 2018 WL 4719347 (Del. Ch. 2018) · AB Stable VIII LLC v. MAPS Hotels, 268 A.3d 198 (Del. 2021)

Secondary sources

• Corbin on Contracts and Williston on Contracts — the standard treatises; Corbin's chapters on impracticability and conditions are the best starting point for a brief
• E. Allan Farnsworth, Farnsworth on Contracts — the clearest exposition of excuse doctrine
• James J. White, Robert S. Summers & Robert A. Hillman, Uniform Commercial Code — the working treatise on §§ 2-615, 2-718, and 2-719
• American Law Institute, Restatement of the Law, Liability Insurance (2019), and Barry R. Ostrager & Thomas R. Newman, Handbook on Insurance Coverage Disputes
• Bruner & O'Connor on Construction Law — anti-indemnity statutes, LDs, and pay-if-paid, state by state
• Kenneth A. Adams, A Manual of Style for Contract Drafting — the standard reference on conditions, representations, and warranty language
• ICC Force Majeure and Hardship Clauses (2020) — model clauses widely used in cross-border contracts
• ABA Model Stock Purchase Agreement and the ABA Private Target Mergers & Acquisitions Deal Points Study — the empirical source on sandbagging, MAE, and indemnity market terms
• The Business Lawyer (ABA); Delaware Journal of Corporate Law; Harvard Law School Forum on Corporate Governance — fastest sources on MAE and deal-litigation developments

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Appendix A — Event-to-Device Decision Matrix

Identify the event, then the device that responds. Where the "primary device" column is empty for your contract, the risk sits with whoever holds it by default — usually the promisor.

Event	Primary device	Fallback doctrine	Funding source
Named natural disaster destroys the plant	Force majeure (enumerated)	Restatement § 263; § 2-613 if goods identified	Property and business interruption insurance
Pandemic or public health order	Force majeure if named; frustration if use is narrowly restricted	Restatement §§ 264, 265	Rarely insured; BI requires physical damage
Government export ban or sanctions	Force majeure ("embargo"); change-in-law clause	Restatement § 264; § 2-615(a)	Political risk / contract frustration cover
New tariff or duty	Change-in-law price adjustment	Rarely excused; a market risk	None; price the risk
Raw material price spike	Index or surcharge clause	None — NIPSCO; § 2-615 cmt. 4	Hedging, not insurance
Sole supplier fails	Named-source excuse if drafted; otherwise none	Dunbar Molasses / Selland	Contingent BI naming the supplier; trade credit
Counterparty insolvency	Credit support: LC, escrow, guarantee, security interest	Setoff; bankruptcy priorities	Trade credit insurance
Third-party injury on site	Indemnity plus additional-insured status	Common law contribution	CGL; the "insured contract" exception
IP infringement claim by a third party	IP indemnity, usually carved out of the cap	Warranty of title, § 2-312(3)	IP or tech E&O coverage
Data breach	Data/privacy indemnity, often super-capped	Statutory and tort duties	Cyber liability
Delivery delay	Liquidated damages, with tolling for excusable delay	Cover damages, § 2-712	Delay-in-startup; surety bond
Defective goods	Warranty plus exclusive repair-or-replace remedy	§ 2-719(2) failure of essential purpose	Products liability; recall cover
Target deteriorates before closing	MAE condition and ordinary-course covenant	Rescission for fraud	Representation and warranty insurance
Rep turns out false post-closing	Indemnity with basket, cap, and survival period	Fraud; CBS v. Ziff-Davis	RWI
Owner fails to pay the general contractor	Pay-if-paid, where valid	Mechanic's lien; bond claim	Payment bond

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Appendix B — The Five Excuse Doctrines Compared

Run these in order. The first one that fits is usually the strongest, and the analysis rarely reaches the last.

	Force majeure clause	Impracticability	Frustration of purpose	Change in law / government act	MAE condition
Source	The contract	Restatement § 261; § 2-615	Restatement § 265	Clause; Restatement § 264; § 2-615(a)	The acquisition agreement
Trigger	An enumerated event, or a catchall of the same genus	An event whose non-occurrence was a basic assumption	An event destroying the principal purpose	A governmental order, regulation, or change	A durationally significant adverse effect
Causation standard	Whatever verb the clause uses	Performance commercially impracticable	Purpose substantially frustrated	Compliance renders performance impracticable or unlawful	Materially adverse to the business
Effect	Suspension, proportional relief, or termination per the clause	Discharge; suspension if temporary (§ 269)	Discharge of remaining duties	Per clause: price adjustment, renegotiation, or termination	Buyer need not close
Defeated by	Ejusdem generis; missed notice; "prevents"	Risk allocation; foreseeability; mere cost increase	Broad permitted use; economic loss only	Silence on interpretation changes and tariffs	Exclusions; disproportionate-effect exception
Burden	The party claiming excuse	The party claiming discharge	The party claiming discharge	The party claiming excuse or adjustment	The party asserting the MAE — heavy
Notice required	Yes, and usually a condition precedent	§ 2-615(c) seasonable notice; § 2-616 buyer election	No formal requirement	Per clause	Per the agreement's closing mechanics
Best evidence	The clause text and a timely, complete notice	A contemporaneous mitigation and substitution file	The permitted-use clause and the order text	The order, the cost data, and the formula	Multi-year earnings analysis by segment

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• Force Majeure After the Pandemic: What Actually Excuses Performance
• The Battle of the Forms and Other Everyday Disasters Under UCC Article 2
• The Release You Signed: How Settlement Agreements Fail and What Makes Them Hold
• Attachment, Perfection, Priority: The Three Questions Every Secured Lender Must Answer

Guides

• Force Majeure, Impossibility, and Excuse: A Comprehensive Guide to Contract Performance Under Disruption
• Sales of Goods Under UCC Article 2: A Comprehensive Guide to Formation, Warranties, and Remedies
• Secured Transactions Under UCC Article 9: A Comprehensive Guide
• Settling a Civil Case: A Comprehensive Guide to Negotiation, Releases, and Enforcement

Checklists

• Negotiating Indemnity and Limitation of Liability Clauses: A Practical Checklist
• Drafting and Reviewing a Purchase Order and Terms of Sale: A Practical Checklist
• Taking and Perfecting a Security Interest: A Practical Checklist

Toolkits

• The Sale of Goods and Supply Chain Toolkit
• The Construction Law Toolkit
• The Secured Lending and Collateral Toolkit
• The Settlement and Case Resolution Toolkit