Increase of costs of performance: under the MBE approach, this is generally considered:

• A. Not a good reason to excuse performance
• B. A good reason to excuse performance
• C. Always controls the contract
• D. An acceptable risk in all circumstances

Answer: (A)

Rising costs of performance generally do not excuse performance. Under contract law, a party can be excused only if performance becomes impracticable or impossible due to unforeseen events. Simply higher costs or economic hardship isn’t enough to discharge the obligation; the risk of cost increases is usually allocated by the contract or borne by the party obligated to perform. Only if there’s a true impracticability (or impossibility) or a force majeure/price-adjustment clause that shifts the risk would performance be excused. So the best answer is that increasing costs are not a good reason to excuse performance.