Brief Fact Summary. Timothy Dills and the Neecon Corporation (Plaintiff) sued the Town of Enfield (Defendant) to recover a $100,000.00 deposit Plaintiff had paid the agency under an option and contract for sale. Plaintiff appealed from a judgment for the Defendant.
Synopsis of Rule of Law. The occurrence of a foreseeable event, contemplated by the parties time at the time of the contract, does not render the promised performance impractical and thereby excused.
Only in the most exceptional circumstances have courts concluded that a duty is discharged because additional financial burdens make performance less practical than initially contemplated.View Full Point of Law
Issue. Whether the doctrine of commercial impracticability excuses a developer from submitting construction plans when he discovers that necessary financing had become available?
Plaintiff contends that his inability to obtain financing made submitting the construction plans futile and therefore the doctrine of impracticability discharged him of his duty to submit the plans. However, the doctrine of impracticability is not applicable in this case. The occurrence of a foreseeable event does not render the promised performance impractical and thereby excused. In order to excuse a party’s duty for impracticability, a promised performance must demonstrate that the event made the performance impracticable; the nonoccurrence of the event was a basic assumption on which the contract was made; the impracticability resulted without the fault of the party seeking to be excused; and the party has not assumed a greater obligation than the law imposes. It is the party who wants his promise to be excused burden to show the nonoccurrence of the event was the basic assumption of the contract.
Here, Plaintiff has not satisfied its burden to show the nonoccurrence of the event was the basic assumption of the contract. The court cannot conclude that the Defendant’s failure to obtain financing was an event the nonoccurrence of which was a basic assumption upon which the contract was made. The parties expressly contemplated the financial difficulties that Plaintiff might encounter. When sophisticated contracting parties have negotiated termination provisions, court should be slow to invent additional ways to excuse performance. Thus, the Plaintiff’s failure to obtain financing was foreseeable and contemplated at the time of the contract and cannot excuse his non-performance.
Discussion. The defense of impracticability is available if due to changed circumstances performance would be infeasible from a commercial viewpoint, the promisor may be excused just as he would be if performance were literally impossible. Restatement (Second) Section 261 states that a party’s performance may be made impracticable without his fault by the occurrence of an event the nonoccurrence of which was a basic assumption on which the contract was made, and his duty to render performance is discharged.