Brief Fact Summary. The Plaintiff, Chase Precast Corp. (Plaintiff), sued the Defendant, John J. Paonessa Co. (Defendant), when the need for the median barriers supplied by the Plaintiff was eliminated and the Defendant thereafter refused to perform the remainder of the contract.
Synopsis of Rule of Law. “[W]hen an event neither anticipated nor caused by either party, the risk of which was not allocated by the contract, destroys the object or purpose of the contract, thus destroying the value of performance, the parties are excused from further performance.”
where from the nature of the contract it appears that the parties must from the beginning have contemplated the continued existence of some particular specified thing as the foundation of what was to be done, then, in the absence of any warranty that the thing shall exist, the contract is to be construed not as a positive contract, but as subject to an implied condition that the parties shall be excused in case before breach performance becomes impossible from the accidental perishing of the thing without the fault of either party.View Full Point of Law
Issue. Was the purpose of the contract frustrated, rendering the remainder of the contract voidable?
Held. Yes. “[W]hen an event neither anticipated nor caused by either party, the risk of which was not allocated by the contract, destroys the object or purpose of the contract, thus destroying the value of performance, the parties are excused from further performance.” In the present case, the Department eliminated the need for median barriers in the project. The Defendant bore no responsibility for the elimination of the barriers and the contract between the parties did not allocate the risk to either party that the barriers would be eliminated. The Defendant’s contract with the Department contained a standard provision permitting the Department to eliminate items or portions of work. The Plaintiff supplied barriers to the Department in the past and was aware of the standard provision contained in its contracts. Therefore, the Plaintiff has no recourse against the Defendant for breach of contract, as the purpose of the contract was frustrated by an event caused by unallocated risk.
Discussion. If a contingency occurs that is neither caused by either party, nor the risk of the occurrence of which was allocated to either party, the purpose of the contract is frustrated and performance is excused.