In determining whether such governmental-mandated restrictions would frustrate the purpose of a contract, courts in California have decided that if the regulation does not entirely prohibit the business to be carried on in the leased premises but only limits or restricts it, thereby making it less profitable and more difficult to continue, the lease may not be terminated or the lessee excused from further performance. Our lives are surrounded by contractual obligations we undertake constantly. The court said: "Although the doctrine of frustration is akin to the doctrine of impossibility of performance (see Civ. 34296(U)(Trial Order)). Thus, if (as the trial court found) the statute applied retroactively, the certificate of independent review prepared back in 1999 was insufficient to validate the gift. The court then parsed Walters intent with respect to the employment precondition, finding substantial evidence that Walters failure to modify the trust following his sale of the companys assets did not reflect a desire to allow the gifts to Schwan and Johnson to lapse. Another typical example: I am to dig a well for you for five thousand dollars but discover the soil is far more rocky than I thought and the cost to me is doubled. The contract contained a force majeure provision that permitted Phillips to terminate the agreement without liability for circumstances beyond our or your reasonable control, including, without limitation, as a result of natural disaster, fire, flood and several other possible contingencies, none of which included an epidemic or a pandemic. 2d 710, 719-20. We comment on local court practices, including procedures in Department 129 (the probate unit) of Sacramento County Superior Court. "[T]he impossibility must be produced by an unanticipated event that could . impossibility. California courts may excuse a partys non-performance of a contractual obligation if such an unforeseen event occurs and prevents the party from performing. When a court looks at this type of legal dispute, it will have to look at the condition of the performance based on the circumstances that . (See City of Vernon v. City of Los Angeles, 45 Cal. 1981)). Another case of impossibility is when an item crucial to performance becomes destroyed (through no fault of the defaulting party) and there is no reasonable substitution. In Snow Mountain W. & P. Co. v. Kraner, 191 Cal. In the contract setting, impossibility can excuse nonperformance with a condition precedent. The tenant, Equinox Bedford Ave Inc. operated a gym on the premises and argued that frustration of purpose and impossibility excused their obligation to pay rent during the New York state government shutdown that closed gyms. In this case, CEC Entertainment, the operator of the children's entertainment-focused pizza parlor Chuck E. Cheese, sought rent abatement or reduction under leases for venues in North Carolina, Washington and California. Sup. The court granted 1600 Walnut's motion to dismiss Cole Haan's counterclaims. ), 2020 N.Y. Slip Op. "Impossibility" is thus a doctrine "for shifting risk to the party better able to bear it, either because he is in a better position to prevent the risk from materializing or because he can. Many courts distinguish between subjective and objective impossibility, refusing to excuse subjective impossibility, or impossibility related solely to the individual promisor, but excusing objective impossibility relating to the nature of the promise. One noted commentator on New York contract law states: "The doctrine of impossibility may provide a defense where unforeseen government action prevents the performance of a contract." [13] In one case, a court excused a fabric supplier from performing under a supply contract where the government requisitioned all cloth materials to meet wartime . California, on the other hand, excuses . Contractual force majeure clauses and the doctrines of commercial frustration and impossibility are defenses that are likely to arise with regularity. The doctrine of impossibility of performance is also known as legal impossibility, legal impracticability and impossible performance. The New York state government ordered the closures of nonessential businesses in March, and The Gap temporarily closed all of its stores in the United States, Canada and Mexico the same month. If the only way to perform would be to go to extreme hardship or expense, it is still possible. business law. The difference between impracticability and impossibility is that impracticability is still physically possible; however, performance will result in a substantial hardship to the performing party. 1600 Walnut Corporation, General Partner of L-A 1600 Walnut LP v. Cole Haan Company Store LLC (E.D. If performance of an act becomes impossible or unlawful, after a contract has been executed, and such impossibility is due to an event which the party undertaking the performance could not prevent, then such contract itself becomes void or one can say that the contract becomes 'frustrated'. Because the court found that the pandemic fit within the general parameters of a natural disaster, it concluded that Phillips properly terminated the agreement and dismissed JNs breach of contract claim. Under the defense of impossibility (sometimes referred to as impracticability or commercial impracticability), a party's obligation to perform under a contract is discharged if: (i) after entering into the contract, an unexpected intervening event occurs, (ii) the non-occurrence of the intervening event was a basic assumption underlying the Related doctrines include impossibility of performance, impracticability of performance and force majeure. The doctrine of promissory estoppel 4. Thus, the court focused on whether or not CB Theater was prohibited by government order from opening at all. A typical example is that a war breaks out and a critical component of a product is either impossible to obtain or so expensive that it makes the transaction commercially impractical. Doctrine of Impossibility of Performance (1920) 18 MICH. L. REV. The court based its ruling in part on Section 264 of the Restatement of Contracts governing impracticability of performance prevented by government regulation or order. 269]; Primos Chemical Co. v. Fulton Steel Corp. wex definitions. Under this doctrine, California courts have required a promisor seeking to excuse itself from performance to prove that the risk of the frustrating event was not reasonably foreseeable and that the value of counter-performance is totally or nearly totally destroyed. The Limits of Force Majeure. California courts tend to find impossibility in a case where one of the parties died or suffered incapacitation, which would make it impossible for that person to perform. Again, the court is likely to balance the equities. 5. 187-192; Taylor v. In re CEC Entertainment Inc. (U.S. Bankruptcy Court, S.D. Copyright 2023, Downey Brand LLP. We explore issues of mental capacity, undue influence, fiduciary duty, and financial elder abuse. Courts often discuss impossibility synonymously with the doctrine of frustration of purpose. This legal doctrine is triggered when something occurs which would make it burdensome for the performing party to act under the contract. impossibility performance defense breach contract. Temporary impracticability occurs when the unexpected, intervening event renders performance temporarily impracticable. A party can invoke impossibility and argue that it did not perform its contractual obligations because it was impossible for it to do so. Michigan and California, however, have expanded the doctrine to include not only instances of strict impossibility but also when performance would be impracticablean easier standard to establish. The contractual defense of impossibility may be applied where a particular condition, which both parties to the contract assumed would continue when the contract was signed, ceases to exist as a. 13:2 The impracticability doctrine evolved relatively recently out of the doctrines of impossibility and frustration of purpose.1 Indeed, until the middle of the nineteenth century, the common law almost always required specific performance of contractual obligations. And whether the facts justify the impractical defense is a matter of fact for the judge to determine. COVID-19 has upended the operations of countless California businesses. The tenant in UMNV 205207 Newbury LLC v. Caff Nero Americas Inc. closed its doors and stopped paying rent in March 2020 after Massachusetts barred restaurants from allowing on-premises consumption of food or drinks. This suggests that the court here took quite a broad view of the underlying purpose of this lease. Under the law in effect in 1999, a certificate of independent review from such an attorney could validate the bequest to Youngman, i.e., save a gift that otherwise would fail as the presumptive result of undue influence. Every time you buy a product using an online account or a credit card, you are entering into a contract to pay the credit card company for the product delivered. All of us enter into dozens of contracts every week. The soundness of including "pandemic" or "epidemic" within the definition of a force majeure clause. For parties negotiating contracts during the pandemic, consider inserting an additional provision related to COVID-19. 2022, Stimmel, Stimmel & Roeser, All rights reserved| Terms of Use | Site by Bay Design, Impossibility Of Performance As A Defense To Breach Of Contract, In the unique context of transactions between merchants, the Uniform Commercial Code carves out an exception and allows the defense of. The legal expansion of the meaning of "impossibility" as a defense, (which at common law originally meant literal or physical impossibility of performance) to include "impracticability" is now generally recognized as a valid defense (6 Williston on Contracts (rev.ed.) The courts are clear that circumstances which only make performance harder or costlier than the parties contemplated when the agreement was made do not constitute valid grounds for the defense of "impracticability" unless such facts are of the gravest importance. The doctrine of frustration of purpose may be available when unforeseen circumstances undermine a party's principal purpose for entering into the contract. As the trial court found, Walters purpose was to encourage Schwan and Johnson to continue working for the company, which they did as long as Walter owned it. Per the lease, services at this location must be consistent with other Caff Nero locations in Greater Boston area. The impossibility doctrine looks at whether the underlying action to be performed in a contract was possible under the circumstances, while the frustration of purpose doctrine analyzes whether the parties can achieve the stated or implied purpose of the contract. 902 [1987]). The expression force majeure does not denote a common law doctrine. Holland & Knight Retail and Commercial Development and Leasing Blog. To the extent that certain assumptions or conditions are inherent in performance under one contract, ensure that you have taken appropriate steps to preserve the applicability of these defenses downstream. A restaurant is closed due to the coronavirus pandemic. Code, 1511; 6 Cal.Jur. California Court Can Apply Impossibility Doctrine, Trustees Beware: The Line Between Protected and Wasteful Litigation Is Thinner Than You Think, California Courts Should Prioritize Hearings on Elder Abuse Restraining Orders, ChatGPT Blog Post on Undue Influence Gets a D, Home Is Where You Lay Your Sombrero Spouse Who Lives Abroad Cannot Serve as Administrator of Husbands Estate, Youre Fired! The lease provided that Caff Nero may use premises solely for "the operation of a Caff Nero themed Caf under Tenant's Trade Name and for no other purpose" (Caff Nero at 2). A typical example would be a painter not finishing his contractual obligation to paint a home that had burned down during the project. Thus, her noncompliance with the employment condition was caused by her own decision to retire. Civil Code Section 1511 excuses a party's performance of a contractual obligation when performance is 'prevented or delayed by operation of law' or by an 'irresistible, superhuman cause.' In almost all cases, the fundamental tests which have been applied by courts before applying the above legal maxims to the facts of a case, are to see whether the event (i.e., non-compliance with a law) was .