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Impossibility: One Way a New York Court Will Let You Out of a Contract


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1/1/2016
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There aren't that many reasons that a New York court will just let you out of an agreement; of these few reasons, one of the most powerful ways out is if the defendant can demonstrate that it was impossible for them to live up to their end of the agreement.

Consider the following scenario:

In Kolodin v. Valenti, New York's Appellate Division, First Department was confronted by two business partners in the music industry who were formerly romantically involved, and now sought to void their business agreement when their romantic relationship dissolved. Ordinarily, that wouldn't fly, but there was a critical fact in this case that pushed the court to allow rescission of the contract: 

As part of the dissolution of their personal relationship, the parties entered into a stipulation that barred the parties from communicating with each other unless it was done via their respective attorneys. 

Under these circumstances, the appellate court agreed that their professional agreement could no longer be performed, stating as follows:

“Impossibility excuses a party’s performance only when the destruction of the subject matter of the contract or the means of performance makes performance objectively impossible … Moreover, the impossibility must be produced by an unanticipated event that could not have been foreseen or guarded against in the contract.” Here, performance by the parties was rendered objectively impossible as a matter of law because the stipulation precluded all contact by the parties, with the exception of counsel."

A word of caution:

As you should guess, the threshold for demonstrating impossibility is rather high; otherwise, it wouldn't be "impossible," would it?



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