Impossibility of Performance as a Defense to Breach of Contract

If you are sued under a contract that you couldn’t perform because it was impossible to do so, you may have a valid defense. But courts are wary of this defense, and it is important to know when it is truly impossible to comply with the terms of an agreement

What is Impossibility?

Impossibility as courts define it may be a little different than the way the word impossible is used by lay people.

Certainly, if it is impossible to perform the terms of an agreement, or to perform a party’s obligations under a contract, the party will be excused from performance. But in many cases, a party will say that performance was impossible when in fact it was not—it was just difficult, inconvenient, undesirable, or expensive.

Impossibility, if it does apply to your case, will excuse performance regardless of the language of your contract. You don’t need a specific “impossibility” clause in your agreements, although you certainly can include language limiting or expanding the scope of what legal impossibility will be.

What Impossibility is Not

Let’s start with situations where impossibility won’t ever excuse a party from performing a  contract.

If a party knew of the situation that makes performance impossible at the time of contracting, impossibility will not be a defense. For example, assume you have an orchestra that contracts with a concert hall. The day before the concert, the conductor and the entire violin section get so sick they can’t perform.

That’s not impossibility—the orchestra knew that sickness can happen anytime, to anybody, and yet the orchestra failed to include provisions in the agreement to protect them from this unfortunate but very possible contingency.

Impossibility won’t be a valid defense where the party seeking to be excused assumed the risk of impossibility. You can’t open a business, rent a storefront and then get out of paying your lease because there are no customers. You assumed the risk that there could be no customers, and knew this could happen beforehand.

How Courts Determine Impossibility

To see if impossibility is an actual defense to performance under a contract, courts will look to see (1) how difficult, or how much hardship will be placed on the party seeking to get out of the agreement (2) whether the impossibility was foreseeable at the time of contracting.

Foreseeability

Impossibility would not be a defense to a hurricane coming in Florida—that is a yearly, foreseeable event. However, if there were riots or civil unrest in the streets that prevented a contract from being performed, that may create the impossibility needed, given that kind of event is generally not common, and not foreseeable.

If you have a cannabis business, a new law being passed that makes your business illegal may be foreseeable. Cannabis laws are still unsettled, and many legislators have mixed feelings about its legality. A court may say that you could have foreseen that possibility, and thus should have included language in your agreement that protects you from that contingency.

Plan for every contingency. Call the West Palm Beach business litigation lawyers at Pike & Lustig to help you if you have a commercial litigation case.

Resource:

natlawreview.com/article/origins-force-majeure-clause-and-impossibility-contractual-performance-defense