Dills v. Town of Enfield

Supreme Court of Connecticut · Contracts

ContractsCommercial impracticabilityConditions precedentRisk allocationcommercial impracticabilityimpossibilityconditions precedentfinancing contingency

Facts

Dills contracted with the Enfield development agency to buy and develop town property and paid a $100,000 deposit. The contract made the agency's duty to convey conditional on Dills' submission of construction plans acceptable to the agency and submission of evidence of financial capacity, and it allowed Dills to recover his deposit if, after preparing satisfactory construction plans, he could not obtain financing. Dills submitted only preliminary plans, which the referee found were not the contractually required construction plans, and despite diligent efforts he could not obtain mortgage financing. The agency terminated under the clause allowing retention of the deposit for failure to submit construction plans, while Dills attempted to terminate under the financing clause and reclaim the deposit.

Issue

Whether the doctrine of commercial impracticability excused Dills from submitting the contractually required construction plans after financing became unavailable, thereby allowing him to recover his deposit. The case also presented whether the trial court could reject the attorney trial referee's legal conclusion and render judgment for the defendants on the facts found.

Rule

A party seeking discharge by supervening impracticability must show that: (1) an event made performance impracticable; (2) the nonoccurrence of that event was a basic assumption on which the contract was made; (3) the impracticability occurred without that party's fault; and (4) the party did not assume a greater obligation than the law imposes. The doctrine does not excuse performance merely because it becomes financially burdensome, and it does not apply where the alleged contingency was foreseeable and the contract expressly allocates that risk. A trial court is not bound by an attorney trial referee's legal conclusions and must render such judgment as the law requires on the facts found.

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Lena Ortiz contracted with the Riverbend Redevelopment Board in Hartford, Connecticut to buy a parcel for a mixed-use project. The agreement required her to submit final architectural plans acceptable to the board before she could invoke a clause allowing cancellation and return of her $80,000 deposit if, despite diligent efforts, she could not obtain construction financing. After lenders in Boston and Providence declined to finance the project, Ortiz stopped work on the plans because completing them would cost another $120,000.

If Ortiz sues to recover the deposit, what is the strongest argument for the board?

Explanation. The majority rule is that supervening impracticability does not excuse performance when the alleged contingency was foreseeable and the contract expressly allocated that risk. Here, financing failure was contemplated by the contract, which conditioned cancellation and deposit return on prior submission of acceptable final plans. Added expense in preparing those plans does not itself establish impracticability. (Derived from Dills v. Town of Enfield (n.d.).)