It is important for the parties to understand that, except in a business environment, increased difficulties or expenses are generally not an excuse to circumvent obligations under the contract. But when an agreement is truly impossible to fulfill through no fault of the party seeking to circumvent the contract, the defense of impossibility is available, and the defense of impracticability is increasingly supported by California courts. [3] Kel Kim Corp., 70 N.Y.2d at 902; see also e.B. Citadel Builders, LLC v. Transcon. Realty Inv`rs, Inc., 2007 WL 1805666, at *4 (E.D. La. June 22, 2007) (noting that although hurricanes in New Orleans are predictable events in the summer, a defense of impossibility was available because Hurricane Katrina and its aftermath „devastated the region in a way that went beyond what anyone had predicted”); Gregg School Tp., Morgan Cty. v. Hinshaw, 76 Ind. Appli. 503 (Ind. App.

Ct. 1921) (allowance due to the closure of the school prescribed by law in connection with the excused Spanish flu). For example, if Ebenezer orders Erasmus to pay Erasmus £100 to paint his house on 1 October, but the house burns down before the end of September, Ebenezer will be released from his obligation to pay Erasmus the £100 and Erasmus will be relieved of his duty to remove Ebenezer`s house; However, Erasmus may still be able to pursue, according to the theory of unjust enrichment, the value of an advantage he granted to Ebenezer before his house burned down. Moreover, as with the doctrine of impossibility, the frustration of purpose generally does not apply only „because it becomes economically more difficult to achieve.” [22] For example, a federal district court in New York rejected an argument that the losses prevented the defendant from paying the plaintiff because „the application of the doctrine of frustration in such circumstances would jeopardize all commercial contracts.” [23] And it is up to the defendant either to deny the existence of the contract, or to deny the breach, to refuse damages, or to state a valid legal ground for why the contract is unenforceable. If you have any questions about the doctrine of impossibility – whether the performance will be excused or delayed – contact Thad Felton at taf@greensfelder.com. Our previous article dealt with Delaware jurisprudence on the interpretation of force majeure provisions related to COVID-19. But what happens if a contract omits or contains a sparse force majeure clause? In these circumstances, common law contractual principles may be a defense against claims for breach of contract due to the COVID-19 pandemic. Parties who breach a contract can defend themselves by demonstrating that the risk was unforeseeable and random and, although the performance of the contract did not make it impossible, it was pointless for them to do so. [24] In the event that a court rejects such remedies, a party found to be in breach of contract may still rely on the fact that the counterparty has not mitigated its harm as an alternative defence or option to reduce potential damages. See U.S. Bank Nat.

Ass`n v. Ables & Hall Builders, 696 F. Supp. 2d 428, 440-41 (S.D.N.Y. 2010) („In an action for failure to fulfil obligations, a claimant is normally required to mitigate the harm he or she suffers. If the plaintiff does not reduce his damage, the defendant cannot be charged. »). In contract law, impossibility is an excuse for non-performance of obligations arising from a contract based on a change in circumstances (or the discovery of pre-existing circumstances), the non-performance of which was an underlying assumption of the contract that makes the performance of the contract literally impossible. The doctrine of frustration of purpose may be available when „a change in circumstances renders the performance of one party virtually worthless to the other,” thus thwarting the primary purpose of drafting the contract. [17] Whether the frustration with the objective is true or not depends on the exact wording of the contract, but in all cases, the frustration itself must be „substantial.” [18] In other words: „The thwarted objective must be so completely at the basis of the contract that, as both parties understood, without it, the transaction would have made little sense.” [19] If the court agrees with the defendant, the entire contract is terminated.

If the performance of the contract is no longer physically possible, future performance would also be excused. An example of this would be when a homeowner hires someone to install a new roof. If the house is destroyed by fire just before the other party starts installing the new roof, the court would not be able to enforce anything or remedy one of the parties because the fire itself was not the fault of either party. In Massachusetts, contracts become impossible to fulfill when a basic acceptance of the contract no longer exists and neither party is responsible for the problem. The (second) new presentation of contracts § 265 states: „If, after the conclusion of a contract, the main objective of a party through no fault of its own is substantially thwarted by the occurrence of an event the unavailability of which was a basic assumption on which the contract was concluded, its remaining performance obligations shall be fulfilled, unless language or circumstances indicate otherwise.” The commentary on restatement further explains that section 265 requires that (1) the thwarted objective was a „primary purpose” in the performance of the contract, so that without it, the transaction „would have little meaning”; (2) frustration is significant; and (3) the non-existence of the frustrating event was a basic assumption on the basis of which the contract was concluded […].