> "an occurrence of a condition, the nonoccurrence of which was a basic assumption of the contract"
Impracticability is not a defense against signing stupid or damaging contracts; it specifically releases a party when circumstances change such that a contract is no longer reasonable. Standard examples are things like the outbreak of war or a supply chain collapse, which don't render a contract literally impossible to fulfill but do place fulfillment outside the domain of any reasonable effort.
Defending against conditions which were already in place when a contract was signed is far harder, and even impossibility is not necessarily a defense if the impossibility is obvious at the time of signing. The only common defense I know of against conditions present at the time of signing is illegality, which of course comes up quite often with things like noncompete clauses.
The misuse complaint at least looks plausible, but I'm pretty baffled by the appeal to impracticability.
In the ensuing lawsuit, Service raises misuse and argues that the scope is ambiguous. Leaving aside the misuse argument, a court could either a) find for Service, thus restricting the scope of the code to be delivered, or b) find for MongoDB, thus giving rise to an immediate defense of frustration/impracticability, which would undo the contract.