What does "commercial impracticability" refer to in contract law?

The concept of "commercial impracticability" in contract law refers to unforeseen events that make the performance of a contract excessively burdensome or impossible, despite the original intent of the parties. This doctrine is often invoked when a significant change in circumstances occurs after the formation of the contract, rendering it exceedingly difficult or unreasonably expensive to fulfill.

For instance, if a natural disaster disrupts supply chains or makes it prohibitively expensive to deliver goods as agreed upon, the party facing these unexpected challenges may claim that performance has become commercially impracticable. This is recognized under the Uniform Commercial Code (UCC) and reflects the principle that parties should not be held to their contractual obligations when unforeseen events fundamentally alter the nature of their agreement.

The other options are not aligned with the legal definition of commercial impracticability. A failure to negotiate terms does not relate to performance difficulties under a contract. Lack of funds pertains to financial issues rather than impracticability due to unforeseen circumstances. Similarly, suggesting that performance is required under any circumstances disregards the principles that allow contracts to be modified or discharged due to impracticability.