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Doctrine of Impossibility: Coronavirus As a Defense for Non-Performance

March 24, 2020

By: Emmett Egger & Daniel McIntosh

Even if a contract does not have a force majeure clause, a party’s obligation to perform may still be discharged under the doctrine of impossibility. The doctrine of impossibility refers to situations when it is impossible for a party to a contract to perform. Florida courts are reluctant to excuse performance that is not impossible but merely inconvenient, profitless, and expensive. However, even if performance is impossible, a party may not be able to use the doctrine of impossibility as a defense to non-performance if the party:

  1. knew of the facts, at the time the contract was executed, that made performance impossible;
  2. assumed the risk of impossibility; or
  3. could have acted to prevent the event rendering performance impossible.

Ultimately, determining whether a party can successfully use the doctrine of impossibility as a defense is a factually intensive inquiry. The findings of Florida courts are too numerous to catalog due to the multiple of varied factual situations. Moreover, courts have used the doctrine of impossibility as a devise to allocate risk among the parties to a contract.

In allocating risk under the doctrine of impossibility, courts have analyzed the following factors, furthering the depth and scope of the factual inquiry:

  1. the degree of hardship imposed on a party;
  2. the foreseeability of the event making performance impossible; and
  3. the language of the contract in determining the allocation of the relevant risks.

The coronavirus and the indirect effects of the coronavirus – such as government orders and supply chain deficiencies – provide a multitude of factual situations that may give rise to a defense based on the doctrine of impossibility. An important factual inquiry may revolve around when the parties’ executed the contract. For example, China reported a cluster of cases of the coronavirus on January 7, 2020. Thus, if a party entered into a contract after January 7, 2020, a court may find that, at the time the contract was executed, a party assumed the risk or knew of the facts which led to performance being impossible.

The doctrine of impossibility as a defense to non-performance is fact specific and depends on the specific language of the contract, we encourage you to seek out a lawyer to analyze your agreement and the facts specific to your matter.

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This article is informational only. You should consult an attorney before acting or failing to act. The law may change rapidly and no warranty is given. LOWNDES DISCLAIMS ALL IMPLIED WARRANTIES AND WITHOUT LIMITATION, ANY WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE. ALL ARTICLES ARE PROVIDED AS IS AND WITH ALL FAULTS. Consult a Lowndes attorney if you wish to establish an attorney/client relationship.
Emmett

Emmett Egger focuses his practice on assisting clients with acquiring, developing, financing and leasing commercial real estate assets, including multifamily, office buildings, condominiums, shopping centers, hospitality and leisure assets, and senior living facilities. He has experience with a wide range of complex commercial real estate transactions, including real estate portfolio deals and sale-leaseback transactions. He has also represented property owners and management companies in commercial landlord-tenant disputes.

A tennis player from a very young age, Emmett served as captain of the men’s tennis team at the University of Washington and qualified to play in all four junior majors (Australian, French, Wimbledon, and U.S. Open). Utilizing the discipline, focus and determination that he cultivated as a competitive athlete, he provides timely and high-quality legal solutions for clients faced with a variety of complex real estate acquisition, development, finance and commercial leasing issues.

Emmett serves as chair of the Orange County Bar Association’s Real Property Committee. He is also a member of the Orange County Teen Court Advisory Board and the Victim Service Center of Central Florida Young Professional Board.

Still an avid tennis player, Emmett also enjoys sports, hiking, fishing and the great outdoors.

Daniel

Destined to become a lawyer, Dan is a Central Florida native surrounded by more than a handful of lawyers among his relatives – including his dad who was the City Attorney for a number of Central Florida cities and public entities, siblings, cousins, in-laws, and even children. But first Dan wanted to explore the ski slopes of the “wild west” after attending Duke University and before returning to his southern roots to attend the University of Florida Law School. While in college, Dan worked in high-end retail and as a rodman on a survey crew. With this surveying experience behind him, Dan ultimately found his passion in real estate law.

With a focus on business trends, Dan has successfully guided some of the most recognizable Central Florida companies through multi-site, multi-jurisdictional real estate acquisitions, financings, and dispositions. He advises clients on acquisition, leasing and financing, title review and survey analysis, environmental issues and zoning, with attention to every detail of these transactions – from document preparation, review of title commitments, endorsements and coverages, surveys, and closing statements, and all the negotiating and documentation in between. Clients include owners and lenders of shopping centers, retail stores, restaurants, gasoline and convenience stores, golf courses, ski resorts, hotels, and condominium properties.

In addition, Dan has negotiated and closed hundreds of high end residential transactions on sites throughout the southeast.

As a real estate leader in the firm, Dan’s mission has included building and mentoring efficient teams committed to the clients’ business success, echoed in his commitment to his community. A resident of Winter Park for many years, Dan has served in leadership roles on many civic, church, and charitable boards. A graduate and long-time participant in the Winter Park Chamber of Commerce Leadership Program, Dan served as its alumni association president, wrote its initial by-laws, and was a recipient of its Winter Park Chamber of Commerce Community Leader Award. His leadership role on the Winter Park Library Board is helping to bring the City’s vision of a new library and events center to life in Martin Luther King Park. Dan is also a past president of the Orlando Shakespeare Theater and has been a member of its Board for over 20 years.

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