The Coronavirus emergency will and already has caused a lot of business disputes. The emergency has made it impossible for some to comply with all their contractual obligations. Other businesses or individuals may seek to escape their contractual obligations on the pretext of "impossibility." Therefore, its useful to look at Florida's law on the subject.
In Florida, the doctrine of impossibility, often called frustration of purpose, is a defense to a breach of contract action. A party is discharged from performing a contractual obligation "which is impossible to perform and the party neither assumed the risk of impossibility nor could have acted to prevent the event rendering the performance impossible." Marathon Sunsets, Inc. v. Coldiron, 189 So. 3d 235, 236 (Fla. 3d DCA 2016).
A party claiming impossibility as a defense has the burden of proving: (1) that performance under the contract was impossible, (2) that the party did not assume the risk of impossibility, and (3) that the party did not have the ability to prevent the performance from being impossible.
The doctrine of impossibility is employed with "great caution if the relevant business risk was foreseeable at the inception of the agreement and could have been the subject of an express provision of the agreement." Am. Aviation v. Aero-Flight Serv., 712 So. 2d 809, 810 (Fla. 4th DCA 1998).
I believe a lot of the litigation related to this topic will revolve around whether performance under a contractual provision was in fact "impossible." In some situations the Coronavirus emergency will have rendered performance under a contract impossible. In other cases it will have not.
A related topic is that of "Force Majeure" clauses in contracts. A force majeure clause is a contractural provision that governs the parties' responsibilities in case of an unforeseen event or act of God. The general rule, like most areas of contract law, is that the language in each particular Force Majeure provision rules.
Force Majeure clauses that are broader than the scope of the impossibility doctrine are enforceable under Florida law. Home Devco/Tivoli Isles, LLC v. Silver, 26 So. 3d 718, 722 (Fla. 4th DCA 2010).
I believe the Coronavirus emergency has changed how attorneys will draft contracts. Going forward, more parties are going to be more concerned with Force Majeure clauses and who bears the risk of loss from another pandemic.
The information you obtain on this website is not, nor is it intended to be, legal advice. You should consult with an attorney for individual advice regarding your own situation.
March 30, 2020