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. We explore issues of mental capacity, undue influence, fiduciary duty, and financial elder abuse. References. Courts often cite three levels of impossibility: Where performance becomes physically impossible, further performance would almost certainly be excused. After Covid-19 swept through New York last spring, Phillips terminated the agreement to auction the painting and JN sued for breach of contract. wex. A restaurant is closed due to the coronavirus pandemic. Ordinarily, breaking a contract can give the party who suffered as a result the right to various legal remedies. the agreement between the parties does not allocate risks of unexpected events arising. Impracticability Law and Legal Definition. In a survey of cases in federal, state and bankruptcy courts, commercial tenants seeking to delay or excuse the payment of rent because of pandemic-related downturns in business sometimes looked to the equitable doctrines of frustration of purpose and impossibility for relief. The court here dismissed Cole Haan's frustration of purpose argument, citing the lease's force majeure clause, which stated that the tenant was not relieved of its duty to pay rent even in the event that restrictive governmental laws or regulations prevented performance under the contract. Youngman lost the bequest that his friend had given him and also apparently had to pay legal expenses of the other parties. 589, SELECTED READINGS ON THE LAW OF CONTRACTS (1931) 979; Woodward, Impossibility of Per- . 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 doctrine of supervening impossibility is applied in the case of (B) Destruction of subject matter. A typical example would be a painter not finishing his contractual obligation to paint a home that had burned down during the project. 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. 461-462.). Is Legal Action the Solution to Your Homeowners Association Dispute? Impracticability means the excuse in performance of a duty. Mere difficulty, or unusual or unexpected expense, would not excuse him. The trust was drafted by Walter C. Youngman, Jr., a tax attorney and longtime friend (but not blood relative) of Walter Permann. In a Chapter 11 bankruptcy filing before the U.S. Bankruptcy Court in the Southern District of Florida, CB Theater, an operator of upscale dine-in movie theaters, sought to delay or excuse the payment of rent due to government-mandated theater shutdowns during the COVID-19 pandemic. Holland & Knight Retail and Commercial Development and Leasing Blog. Penn., March 30, 2021, 2021 WL 1193100). The key issue is defining what is true impossibility and determining what the actual effect of the impossibility should be. Addressing Louboutin's impossibility argument, the court points out that the pandemic did not bar the tenant from selling its products it merely reduced foot traffic in the store's area. 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. 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. The court rejected this framing, pointing out that as it was possible for CB Theater to operate a movie theater after the partial capacity reopening, CB Theater could still fulfill the purpose of the lease. Co. v. American Trading Co., 195 U.S. 439, 467-68 [25 S. Ct. 84, 49 L. Ed. In re CEC Entertainment Inc. (U.S. Bankruptcy Court, S.D. To make out the defense of impracticability, businesses will generally need to show: 1) There was a contingency, the non-occurrence of which was a basic assumption underlying the contract; 2) the risks associated with the contingency were not assigned to either party; and 3) the promisor was not responsible for the difficulties in performance. Last month, a court in Massachusetts found that a commercial tenants obligation to pay rent had been discharged where the purpose of the lease had been frustrated by the effects of the pandemic. We invite you to follow our blog and to get to know us through our posts. 692, 697 [109 P. Impracticability: As seen in the example above, a clause can refer to performance being obstructed or delayed, but may . The performance of this Agreement is subject to termination without liability upon the occurrence of any circumstance beyond the control of either party - such as acts of God, war, acts of terrorism, government regulations, disaster, strikes, civil disorder, or curtailment of transportation facilities - to the extent that . As a result, cases from around the country have come to differing conclusions as to whether to grant the requested relief. Retail apparel store owner Pacific Sunwear sought a temporary restraining order (TRO) and preliminary injunction to compel landlord Simon Property Group to allow Pacific Sunwear to reenter its 16 stores in Simon Property Group malls, on which Simon Property Group had changed the locks due to Pacific Sunwear's nonpayment of rent. Even in the event of a government-issued order, a party asserting impossibility generally must have explored viable alternatives that would permit performance. Introduction 2. 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. Superior Ct., Feb. 8, 2021, 2084CV01493-BLS2). Walter wanted to include a bequest to Youngman. contracts. They buy or lease property. The doctrine applies "only when the destruction of the subject matter of the contract or the means of performance makes performance objectively impossible," and it did not apply as to Kel Kim because its "inability to procure and maintain requisite coverage could have been foreseen and guarded against when it specifically undertook that The Uniform Commercial Code carves out an exception and allows the defense of commercial impracticability for contracts that involve the sale of commercial goods. 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. 289 [156 P. 458, L.R.A. CB Theater argued that the purpose of their movie theater lease, which they identified as operating a movie theater to show new-release films, was frustrated from the time the Florida state government shut down theaters until the theater's actual reopening. The doctrine applies where performance is subsequently prevented or prohibited by a judicial, executive or administrative order made with due authority by a judge or other officer of the United States, or of any one of the United States. On March 11, 2020, the World Health Organization declared Covid-19 a pandemic. Walter included these provisions to incentivize his key employees to remain at the company following his death as his wife was not involved in running it. d (Am. Frustration in English Law 4. Related doctrines include impossibility of performance, impracticability of performance and force majeure. "[T]he impossibility must be produced by an unanticipated event that could . In assessing the tenant's frustration of purpose argument, the court looked at the lease holistically, stating that a shutdown lasting a few months does not frustrate the purpose of the entire 15-year lease. Contractual force majeure provisions often contain special notice or timing provisions. As the force majeure event clause of the lease identified "governmental preemption of priorities or other controls in connection with a national or other public emergency" specifically, the court found that The Gap's frustration of purpose argument fell short (The Gap at 8). He changed the name of the entity he retained to Custom Model Products and thereafter sold model trains. Though she had health problems and had worked for Control Master Products for 45 years, she did not show that it was impossible for her to continue to work. 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! This is a harder argument to advance since the material supplier can argue that he bears no responsibility for the frustration but is made to suffer more than the roofer. In cases that involve the impossibility defense, one party may argue it was impossible for it to perform, while the other claims it was merely difficult or burdensome. Sometimes, subsequent to the formation of a contract, an impossibility arises with regard to its performance. Temporary impracticability occurs when the unexpected, intervening event renders performance temporarily impracticable. The doctrine of impossibility and judicial treatment of force majeure clauses vary from state to state. In the leading California case approving this expanded meaning, Mineral Park Land Co. v. Howard, 172 Cal. Florida, Miami Div., Jan. 27, 2021, 2021 WL 564486). However, as with the application of the defense of frustration of purpose, even where the impossibility doctrine may apply, but is merely temporary, a partys duty is likely to be suspended only during the time of the impossibility. 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. Parties who may want to rely upon the defenses of impracticability, impossibility or frustration of purpose to either excuse delay or to discharge their contractual responsibilities, should observe these best practices: A party who wishes to rely on these doctrines should first check its contract. In California probate law, impossibility was a recognized concept until 1982, when the Legislature repealed former Probate Code section 142. The doctrine of impossibility is a contract law concept and refers to situations in which it is impossible for a party to a contract to perform its obligations under it. We comment on local court practices, including procedures in Department 129 (the probate unit) of Sacramento County Superior Court. 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 For example, a roofing contractor would not be in breach for failing to complete a roof on a building destroyed by fire through no fault of his or hers. If the event was so unusual and unexpected that the parties could not reasonably have foreseen it, and if it is unfair to place the risk of its happening on either party, then the Court may excuse further performance of the contract on both sides. The doctrine of impossibility is available when circumstances occur that render performance of a contract objectively impossible. It's time to renew your membership and keep access to free CLE, valuable publications and more. In this case, tenant Christian Louboutin, a luxury shoe store, sought rescission of the remainder of its lease on the grounds of frustration of purpose and impossibility in light of decreased foot traffic in Manhattan due to pandemic shutdowns. Walter did not amend the trust before he died. John McIntyre is a litigation partner in Reed Smiths Pittsburgh office. Termination by agreement or by a provision in the contract. Walter Permann for decades owned a wire and cable distributing business called Control Master Products. And whether the facts justify the impractical defense is a matter of fact for the judge to determine. Again, the court is likely to balance the equities. In recent days, certain cities and counties and the State of California have ordered mandatory closures of non-essential businesses or imposed other restrictions in operations through shelter-in-place or safer at home ordinances or orders. California courts have explained that: "A thing is impossible in legal contemplation when it is not practicable; and a thing is impracticable when it can only be done at an excessive and unreasonable cost." City of Vernon v. City of Los Angeles (1955) 45 Cal. Impossibility: In general, the doctrine of impossibility excuses a party's performance only when the subject matter of the contract or the means of performance renders performance objectively impossible. 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. Impossibility in other systems of law 5. 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. In the contract setting, impossibility can excuse nonperformance with a condition precedent. For example, the roofer who contracts to buy material for use on a building destroyed by fire may be able to cancel that material contract. The court ruled the owner's deletion wholly destroyed the purpose of the contract with the supplier, which excused further performance. The impossibility defense is an excuse to performance that Texas courts will refer to as impossibility of performance, commercial impracticability, or frustration of purposethough the choice of terminology is of no significance, as each is applied identically. The statutory restriction on donative transfers to drafters such as attorney Youngman is unyielding even when the evidence shows that the drafter has not done anything wrong. All rights reserved. Learn more about a Bloomberg Law subscription. Under some circumstances, impossibility of performance can excuse failure to perform. The list is endless. Force majeure clauses are often included in commercial contracts to excuse a partys performance hampered by various mutually agreed-to events such as fires, hurricanes, and terrorist attacks. 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. Instead, the court looked to specific language of a section of the lease titled, "Effect of Unavoidable Delays," which was separate from the lease's force majeure clause. Impossibility 3. 435-450; 4 Cal.Jur. A party can invoke impossibility and argue that it did not perform its contractual obligations because it was impossible for it to do so. For example, force majeure provisions in many leases exclude from its application the continuing obligation to pay rent. Thus, the court focused on whether or not CB Theater was prohibited by government order from opening at all. The court ultimately held that, under the frustration of purpose doctrine, Caff Nero's obligation to pay rent was discharged during the period in which the caf could not serve food and beverage on the leased premises.