Wednesday, April 18, 2018
A recent case out of the District of Maryland, Green v. Jenkins Services, LLC, Case No. PWG-16-2572 (behind paywall), has something to say about impossibility and assumption of risk. In the case, Green hired Jenkins to demolish their fire-destroyed house and build them a new one. However, after demolition, Jenkins found that the land was unsuitable for an on-site sewage system, and therefore could not acquire the necessary permits for construction. As a result, Jenkins did not build the new house, and Green sued for breach of contract.
Jenkins argued that it was excused from performance by impossibility, because it was not its fault that the land failed the tests the state required for building. But Green argued that Jenkins assumed the risk, since Jenkins had promised in the contract to obtain all the required permits.
The court agreed with Green. Jenkins promised in the contract to obtain the proper permits, and Jenkins knew at the time it made this promise what the government regulations surrounding those permits were. Therefore, Jenkins assumed the risk that it might not be able to obtain the proper permits. If Jenkins had wanted to be excused from performance if the government refused to issue the permits, it should have provided so in the contract. Its failure to do meant it was in breach of contract.