Unforeseen Events, A Good Defense?

Is Now the Time To Make A Case for Impracticability? 

 

The COVID-19 pandemic, with all its consequences, was unforeseeable. That argument might be a good defense to many claims of a breach of contract for non-performance. The key is that what you were obligated to do is now almost impossible, or “impracticable,” as defined by Florida courts. 

So, you ask, “what makes a good case for impracticability?”

To make a good case for impracticability, you have to:

  • first show that things have changed quite significantly,
  • that the change was beyond your control,
  • that the change was unforeseen,
  • and that the change goes to the heart of the deal and performance now is almost impossible.  

This argument is what is called an “affirmative defense.” You make this argument in response to a claim of breach of contract. If someone claims that you have breached your contract, then you are in a better position to reach a good settlement and avoid a lawsuit if you can establish good facts in support of impracticability. If you do get sued, then you may well be in a better position to get to trial where you can explain to the jury why you could not perform or fulfill your obligations.

A real-life example: Embry v. LaSalle National Bank 792 So. 2d 567 (4th DCA 2001)

A tenant had been in a dispute with its landlord; during this dispute,  the landlord’s mortgage holder foreclosed and tried to foreclose out the tenant’s leasehold rights. The court in the landlord/tenant dispute ordered that the tenant pay rent into the registry of the court. Consequently, the tenant could not honor its agreement to pay rent to the mortgage holder if the landlord defaulted on its mortgage loan.

The tenant argued to the court in the foreclosure action that it was impossible (impracticable) to pay the rent to the mortgage holder because of the rent dispute with the landlord and the court order requiring the tenant to pay rent into the registry of the court. The tenant claimed that this was unforeseeable and outside of the control of the tenant. The trial court rejected the tenant’s arguments. However, the appellate court ruled that the jury should address this defense because there were factual issues involved, such as, was the rent dispute a foreseeable defense?

In the end, the tenant got its day in court, or at least the opportunity to leverage for a better settlement.

To determine if your matter has a good defense for impracticability, contact our office to learn more.     

 

 

Bill McEachern is an attorney for Moorhead Real Estate Law Group.

Bill’s experience includes but is not limited to commercial law transactions and litigation; asset-based lending, asset sales, and leasing; business sales; corporate, partnership, and LLC matters; and bank and lender representation.