Without a force majeure clause, will Connecticut excuse performance because of a government shutdown or pandemic?
In AGW Sono Partners v. Downtown Soho (2022) the Connecticut Supreme Court held that the COVID-19 executive orders did not relieve a restaurant tenant of its lease obligations: the doctrine of impossibility or impracticability did not excuse performance (use of the premises was not rendered factually impossible where curbside or takeout service remained permitted and the lease did not prohibit it), and, given the narrowness of the frustration of purpose doctrine, the purpose of the lease was not frustrated even by orders that barred indoor dining entirely. The court noted the lease lacked a force majeure clause that would govern the parties' obligations in a crisis beyond their control.
The trap
AGW is a decision on one lease, not a rule that a government order can never excuse performance. The court said the restrictions 'simply raised the cost of performance for the defendants in a manner that rendered it perhaps highly burdensome, but not factually impossible', and it rested that on a lease that did not limit the tenant to a particular kind of dining and did not prohibit the takeout and outdoor service the orders still allowed. In its impossibility analysis the court also read the lease itself as suggesting that events of the magnitude of the pandemic were not entirely unforeseeable: the lease had no force majeure clause, and its only crisis clause (an 'unavoidable delay' provision) excused only the landlord's obligations. A tenant whose lease restricts use more tightly is not addressed by the holding.
8 authorities
- case343 Conn. 309AGW Sono Partners, LLC v. Downtown Soho, LLCConn.decided 2022read it at the source ↗
The words that state the rule
Applying these principles, we conclude that the doc- trine of impossibility or impracticability did not excuse the defendants from their obligations to the plaintiff under the lease agreement.
- case343 Conn. 309AGW Sono Partners, LLC v. Downtown Soho, LLCConn.decided 2022read it at the source ↗
The words that state the rule
Given the narrowness of the frustration of purpose doctrine, we conclude that the purpose of the lease agreement was not frustrated by the pandemic restric- tions imposed by the executive orders, even those that barred indoor dining entirely. The language of the lease agreement was not limited to a certain type of dining and—in contrast to the more restrictive language con- tained in the sister state cases on which the defendants rely—did not preclude the takeout and subsequent out- door dining that the defendants sought to provide. Put differently, the lease terms did not by themselves render the lease agreement valueless in light of the executive orders.
- case343 Conn. 309AGW Sono Partners, LLC v. Downtown Soho, LLCConn.decided 2022read it at the source ↗
The words that state the rule
Second, the language of the lease agreement suggests that events of the magnitude of the COVID-19 pandemic were not entirely unforeseeable.
- case343 Conn. 309AGW Sono Partners, LLC v. Downtown Soho, LLCConn.decided 2022read it at the source ↗
The words that state the rule
Although the COVID-19 restrictions had undoubtedly serious economic consequences for the viability of the bistro—in particular, the initial closure for indoor dining, followed by the loss of bar business and a reopening for indoor dining only with a drastic reduction in capacity—they did not, by themselves, make performance under the lease agreement impossi- ble or commercially impracticable as a matter of law.20 Instead, they simply raised the cost of performance for the defendants in a manner that rendered it perhaps highly burdensome, but not factually impossible—akin to the outbreak of war, or the closure of the Suez Canal, which had been held not to discharge contractual duties under the doctrine of impossibility.
- case343 Conn. 309AGW Sono Partners, LLC v. Downtown Soho, LLCConn.decided 2022read it at the source ↗
The words that state the rule
First, and most significant, as the trial court found, even under the most restrictive executive orders, use of the premises for restaurant purposes was not rendered factually impossible insofar as restaurants were permitted to provide curbside or takeout service, and the lease agreement did not pro- hibit curbside or takeout service.
- case343 Conn. 309AGW Sono Partners, LLC v. Downtown Soho, LLCConn.decided 2022read it at the source ↗
The words that state the rule
The lease agreement lacks a force majeure clause that would govern the parties’ mutual obligations in the event of a crisis situa- tion beyond their control,21 and, to the extent that the lease agreement provides for any forgiveness of obliga- tion in a crisis situation (thus suggesting that they are foreseeable), it excuses only the plaintiff’s obliga- tions—under § 25 of the lease agreement governing ‘‘unavoidable delay’’ occasioned by a variety of circum- stances, including fire or ‘‘governmental [preemption] in connection with a national emergency . . . .’’
- case343 Conn. 309AGW Sono Partners, LLC v. Downtown Soho, LLCConn.decided 2022read it at the source ↗
The words that state the rule
The judgment is reversed only with respect to the award of damages and the case is remanded for further proceedings as to damages; the judgment is affirmed in all other respects.
- case343 Conn. 309AGW Sono Partners, LLC v. Downtown Soho, LLCConn.decided 2022read it at the source ↗
The words that state the rule
To the extent that our independent research has found authority that excused—at least in part—tenants from their rental obligations during COVID-19, that authority rests on distinguishable lease language, namely, force majeure clauses that governed this particular situation.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.