A party may not rely on the non-performance of the other party to the extent that such non-performance was caused by the first party's act or omission or by another event for which the first party bears the risk.
1. Non-performance caused by act or omission of the party alleging non-performance
This Article can be regarded as providing two excuses for non-performance. However conceptually, it goes further than this. When the Article applies, the relevant conduct does not become excused non-performance but loses the quality of non-performance altogether. It follows, for instance, that the other party will not be able to terminate for non-performance.
Two distinct situations are contemplated. In the first, one party is unable to perform either wholly or in part because the other party has done something which makes performance in whole or in part impossible.
1. A agrees to perform building work on B’s land beginning on 1 February. If B locks the gate to the land and does not allow A entry, B cannot complain that A has failed to begin work. B’s conduct will often amount to non-excused non-performance either because of an express provision entitling A to access the land or because B’s conduct infringes the obligations of good faith and co-operation. This result does not however depend on B’s non-performance being non-excused. The result will be the same where B’s non-performance is excused, for instance because access to the land is barred by strikers.
The Principles contemplate the possibility that one party’s interference result only in a partial impediment to performance by the other party. In such cases it will be necessary to decide the extent to which non-performance was caused by the first party’s interference and that to which it was caused by other factors.
2. Non-performance caused by event for which party alleging non-performance bears the risk
Another possibility is that non-performance may result from an event the risk of which is expressly or impliedly allocated by the contract to the party alleging non-performance.
2. A, a builder, concludes a construction contract to be performed on the premises of B, who already has many buildings on those premises which are the subject of an insurance policy covering any damage to the buildings. If the parties agree that the risk of accidental damage is to fall on B as the person insured, there would normally be no reason to reject the parties’ allocation of risk since risks of this kind are normally covered by insurance. Even therefore if a fire were to be caused by A’s negligence, the risk may be allocated to B, although it would clearly need more explicit language to carry this result than would be the case if the fire which destroyed the building were the fault of neither party.