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Contract Impossibility And COVID-19

Lou Russo
Lou Russo Founder - Russo Law
Lou Russo is an accomplished attorney, arbitrator, and professor as well as the founder of Russo Law LLC—a modern law firm which guides investors, businesses, and executives efficiently through corporate, contractual, commercial real estate, and litigation issues.
Intersection of possible and impossible, Contract Impossibility and COVID-19

The COVID-19 pandemic has many business owners scrambling to understand how their contractual obligations may be impacted.  Many are scouring their contracts and leases for a force majeure clause but are coming up empty handed.  If you find yourself in that position, don’t fret.  

In contract law, the doctrine of “impossibility” may excuse a party’s performance and prevent a breach of contract claim in certain circumstances which may be applicable to the coronavirus pandemic.  

Essentially, a party will claim something made it impossible to perform its’ contractual obligations.  However, the alleged impossibility must be caused by an unanticipated event that could not have been foreseen or guarded against in the contract.  Moreover, the reason for the impossibility must not have existed at the time the contract was made.  

While you must go back in time, many courts have considered the impossibility doctrine in the context of quarantines and epidemics.
For example, a New York court excused a shipping company from delivering coffee beans because the board of health quarantined the vessel and ordered that the infected coffee beans not be unloaded.  J.H. Labaree Co. v Crossman, 100 AD 499, 507 (1st Dep’t 1905), aff’d, 184 NY 586 [1906] (“Performance of the contract by the defendants was legally excused”) (emphasis added).  

On the other hand, a wool manufacturer’s contractual performance to a private party was not excused because it had voluntarily entered into the contract with the government that prevented it from performing under its earlier contract.  Crown Embroidery Works v Gordon, 190 AD 472, 477 (1st Dep’t 1920).  
Finally, in another instance, a manufacturer’s time to build a boat was extended by the “time lost through strikes, epidemics, and causes beyond the control of the contractor.”  Vandegrift v Cowles Eng’g Co., 161 NY 435 (1900).

Without contracts, there is no commerce.  So, you will likely hear the term “impossibility” more and more over the coming weeks and months.  Know your rights.  And, if you find contract negotiation and resolution of related disputes to be impossible to deal with,
Russo Law LLC is just a call (929-262-1101) or email away.

 

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*This blog post is for informational purposes only.  It is not an offer to represent you and does not provide, nor does it intend to provide, legal advice.  You should not act, or refrain from acting, based upon any information on this website. Neither the presentation of such information nor your receipt of the same creates an attorney-client relationship.  This blog is legal advertising. Although this blog post intends to provide accurate and helpful information, it makes no representations, claims, promises, guarantees, or  warranties, express or implied, including the warranties of merchantability and fitness for a particular purpose,  Furthermore, Russo Law LLC does not assume any legal liability or responsibility for the accuracy, completeness, or usefulness of any information, apparatus, product, or process disclosed on this website, nor represents that its use would not infringe privately owned rights.

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