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

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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.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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