Contract law (2022): Excuses for non-performance: Impracticability + Illegal agreement + Clean hands

The doctrine of impracticability in the common law of contracts excuses performance of a duty, where the said duty has become unfeasibly difficult or expensive for the party who was to perform.

Impracticability is similar in some respects to the doctrine of impossibility because it is triggered by the occurrence of a condition which prevents one party from fulfilling the contract. The major difference between the two doctrines is that while impossibility excuses performance where the contractual duty cannot physically be performed, the doctrine of impracticability comes into play where performance is still physically possible, but would be extremely burdensome for the party whose performance is due. Thus, impossibility is an objective condition, whereas impracticability is a subjective condition for a court to determine.

Typically, the test U.S. courts use for impracticability is as follows (with a few variations among different jurisdictions):

1.    There must be an occurrence of a condition, the nonoccurrence of which was a basic assumption of the contract.

2.    The occurrence must make performance extremely expensive or difficult.

3.    This difficulty was not anticipated by the parties to the contract (note: some jurisdictions require that there be no measure within the contract itself to allocate risk between the parties).

An illegal agreement under the common law of contract, is one that the court will not enforce because the purpose of the agreement is to achieve an illegal end. The illegal end must result from performance of the contract itself. The classic example of such an agreement is a contract for murder.

The illegality of a contract depends on (1) the law of the country governing the contract, and (2) the law of the place of performance. Different rules will apply depending on the law of the relevant country(ies).

However, a contract that requires only legal performance on the part of each party, such as the sale of packs of cards to a known gambler, where gambling is illegal, will nonetheless be enforceable. A contract directly linked to the gambling act itself, such as paying off gambling debts (see proximate cause), however, will not meet the legal standards of enforceability. Therefore, an employment contract between a blackjack dealer and a speakeasy manager, is an example of an illegal agreement and the employee has no valid claim to his anticipated wages if gambling is illegal under that jurisdiction.

Clean hands, sometimes called the clean hands doctrine, unclean hands doctrine, or dirty hands doctrine, is an equitable defense in which the defendant argues that the plaintiff is not entitled to obtain an equitable remedy because the plaintiff is acting unethically or has acted in bad faith with respect to the subject of the complaint—that is, with "unclean hands". The defendant has the burden of proof to show the plaintiff is not acting in good faith. The doctrine is often stated as "those seeking equity must do equity" or "equity must come with clean hands". This is a matter of protocol, characterized by A P Herbert in Uncommon Law by his fictional Judge Mildew saying (as Herbert says, "less elegantly"), "A dirty dog will not have justice by the court".

A defendant's unclean hands can also be claimed and proven by the plaintiff to claim other equitable remedies and to prevent that defendant from asserting equitable affirmative defenses. In other words, 'unclean hands' can be used offensively by the plaintiff as well as defensively by the defendant. Historically, the doctrine of unclean hands can be traced as far back as the Fourth Lateran Council.

"He who comes into equity must come with clean hands" is an equitable maxim in English law.