ContractsProf Blog

Editor: Myanna Dellinger
University of South Dakota School of Law

Monday, March 6, 2017

Fire Brings Us Another Impossibility Case

Here's one for when you teach impossibility: 

The plaintiff is a travel company. The defendant operates a resort. They had a multi-year contract whereby the plaintiff would rent out the resort for Passover each year. The resort burned down and the guests could no longer go to it. The resort, however, sought to keep the plaintiff's down payment. This lawsuit in New York, Leisure Time Travel, Inc. v. Villa Roma Resort and Conference Center, Inc., 32504/09 (behind paywall), resulted. 

The court found that the fire "undoubtedly" rendered the resort's performance impossible, but the resort could not unjustly enrich itself by keeping the travel company's deposit. Therefore, the resort had to give the deposit back to the travel company. 

The court also contemplated whether, once the resort was rebuilt, it was required to permit the travel company to rent it out for Passover. The court found that it had been uncertain at the time of the fire whether or not the resort would ever be rebuilt, and it indeed took years for it to be rebuilt. Therefore, it considered the contract to have been rescinded at the point that the fire rendered the resort's performance impossible, with neither party under any obligation to perform anymore. 

(The resort, weirdly, sought payment from the travel company for the years when the resort was not operational and could not be rented out. The court classifies this claim as "incredible" and denies it. The same fire that rendered the resort's performance impossible also freed the travel company from having to pay for a benefit it was no longer receiving.)

http://lawprofessors.typepad.com/contractsprof_blog/2017/03/fire-brings-us-another-impossibility-case.html

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