2025 Session Last amended: 1989 session

§ 336.2A-405 — Excused Performance

Plain-Language Summary

A lessor's or supplier's delay in delivery, or failure to deliver, is not a default if performance was made impracticable by an unexpected event whose nonoccurrence was a basic assumption of the lease, or by good-faith compliance with a government regulation or order (even if that order later turns out to be invalid). If the problem affects only part of their ability to perform, they must allocate available goods among customers in a way that is fair and reasonable, and may include regular customers not currently under contract. The lessor must promptly notify the lessee (and, in a finance lease, the supplier must notify the lessor and lessee) of the delay or nondelivery and of any quota allocated. These rules are subject to the substituted performance rules in section 336.2A-404.

336.2A-405 EXCUSED PERFORMANCE.

Subject to section 336.2A-404 on substituted performance, the following rules apply:

(a) Delay in delivery or nondelivery in whole or in part by a lessor or a supplier who complies with paragraphs (b) and (c) is not a default under the lease contract if performance as agreed has been made impracticable by the occurrence of a contingency the nonoccurrence of which was a basic assumption on which the lease contract was made or by compliance in good faith with any applicable foreign or domestic governmental regulation or order, whether or not the regulation or order later proves to be invalid.

(b) If the causes mentioned in paragraph (a) affect only part of the lessor’s or the supplier’s capacity to perform, the lessor or supplier shall allocate production and deliveries among the lessor’s or supplier’s customers but may include regular customers not then under contract for sale or lease as well as other requirements for further manufacture. The lessor or supplier may so allocate in any manner that is fair and reasonable.

(c) The lessor seasonably shall notify the lessee and in the case of a finance lease the supplier seasonably shall notify the lessor and the lessee, if known, that there will be delay or nondelivery and, if allocation is required under paragraph (b), of the estimated quota made available for the lessee.

History:

1989 c 232 art 1 s 2A-405

History: History: 1989 c 232 art 1 s 2A-405

Practical Notes

A lessor or supplier is not in breach for delay or nondelivery if an unforeseen event or good-faith compliance with a government order made performance impracticable. If only part of their capacity is affected, they must divide what they can deliver fairly among their customers and must promptly tell the lessee about the delay and any reduced amount available. This is the lease equivalent of a force majeure or impracticability excuse, and it works together with the substituted performance rules in section 336.2A-404.

Source: Minnesota Office of the Revisor of Statutes