Case No. 90 IMPOSSIBILITY OF PERFORMANCE Appellate Division, First Department 87

Question

Case No. 90 IMPOSSIBILITY OF PERFORMANCE Appellate Division, First Department 87 A.D.2d 507, 443 N.Y.S.2d 163 (1981) FACTS: Plaintiff Kenyon & Eckhardt, Inc. (Kenyon) signed a lease with Defed Third Avenue Co. (808 Third Avenue) to rent eleven floors of a 34-story buildina de but not yet constructed. At least four of the eleven floors leased by Kenyon exc maximum building height permitted by law. At the time it entered the lease with Ken 808 Third Avenue was seeking government approval to build all 34 stories. The iean provided that, in the event such approval was not obtained, the space to be rented to Kenyon would be recalculated "to reflect any such change proportionately." exceeded the The approval for the added height was denied. As a result 808 Third Avenue sought to terminate the lease. Kenyon claims the lease was still valid although the space to be rented would be altered consistent with the terms of the lease. Kenyon sued 808 Third Avenue to enforce the lease. In response 808 Third Avenue claimed impossibility of performance. ISSUE: Where performance under a lease becomes impossible due to foreseeable circumstances and the lease provides an alternative course of performance in the event performance becomes impossible, can the party whose performance has become impossible avoid liability for nonperformance on the basis of impossibility of performance? DECISION: No, judgment for Kenyon. REASONING: The lease addresses specifically the circumstances that led to 808 Third Avenue's inability to perform and provides a way to handle the situation without terminating the contract. Since both parties agreed to the lease and since performance of the contract was possible, the contract will be enforced. QUESTION** (See back of text for answer) 1) Assume the lease between Kenyon and 808 Third Avenue did not state what w happen in the event government approval for the extra floors was denied. Wha would t effect would this have on 808's claim of impossibility of performance?

Explanation / Answer

The case went in favour Kenyon since, they had already identified one reason for impossibility of performance and recommended a course of action. However, if the agreement did not had identified this cause, two of the possible consequences would have emerged:

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