Facto v. Pantagis

Superior Court of New Jersey, Appellate Division · Contracts

ContractsForce majeureImpracticabilityRestitutionQuantum meruitforce majeurepower failureimpracticability

Facts

Plaintiffs prepaid $10,578 to hold a wedding reception for 150 people at defendant's banquet hall, and the contract included a force majeure clause excusing performance if prevented by an act of God, including a power failure, or other unforeseen events or circumstances. Less than forty-five minutes after the reception began, an area-wide power failure shut off most lighting and air conditioning, prevented the band from playing, and impeded the photographer and videographer. The outage continued past the scheduled end of the reception, conditions became unbearably hot, and the facility was eventually evacuated. Plaintiffs later sought return of the prepaid contract price and additional wedding-related expenses.

Issue

When a banquet hall is excused from performing a wedding reception contract by a force majeure clause because an area-wide power failure materially prevents performance, may it retain the full prepaid contract price? More specifically, does the excused nonperformance also discharge the customers' duty to pay, apart from any amount reflecting the value of partial services actually provided?

Rule

A force majeure clause is construed in light of the contractual terms, surrounding circumstances, and the purpose of the contract, and it excuses performance when an event beyond the party's control materially interferes with performance in the manner contemplated by the clause. When one party is excused from performance because an unforeseen event makes performance impracticable, the other party is generally also excused from its reciprocal performance, including payment of the contract price. If the excused party partially performed before the supervening event, it may recover in quantum meruit for the value of the benefit actually conferred.

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In Phoenix, Elena Ruiz prepaid Summit Grove Events, a fictional banquet company, to host a retirement gala for 200 guests. The contract excused the hall if performance was prevented by "flood, power failure, or other unforeseen events or circumstances." Twenty minutes after the gala began, a regional blackout shut down lighting, sound equipment, and air conditioning for the rest of the evening, and the event ended early in oppressive heat.

Under the majority rule, which result is most likely?

Explanation. A force majeure clause covering power failure excuses performance when the event beyond the party's control materially interferes with substantial performance. But excuse from breach does not entitle the excused party to keep the full contract price; the counterparty's reciprocal duty to pay is also discharged. Because some services may have been provided before the outage, the hall may retain only the value of the benefit conferred in quantum meruit. (Derived from Facto v. Pantagis (n.d.).)