Will this force-majeure clause excuse our performance in Rhode Island?
Nothing located answers that, and that is the finding: no Rhode Island force-majeure statute was found, and no Rhode Island decision construing a force-majeure CLAUSE. What Rhode Island does have is the common law behind the clause, and it is strict. Not one of the 32,579 sections of the Rhode Island General Laws carries a title for force majeure, impossibility, impracticability or frustration, so there is no Rhode Island force-majeure statute to apply; R.I. Gen. Laws § 6A-2-615, the UCC excuse for a seller of goods when a presupposed condition fails, is not among the Rhode Island statutes we publish, and exactly one Rhode Island opinion cites it - Iannuccillo v. Material Sand & Stone Corp., which cites it in support of the common-law doctrine and does not set its words out. Iannuccillo is also the only Rhode Island statement of IMPRACTICABILITY as such: "A party’s performance under a contract is rendered impracticable upon the occurrence of an event or a manifestation of a circumstance the nonoccurrence of which was a basic assumption on which the contract was made." Exactly ONE of the 26,773 published Rhode Island opinions uses the phrase 'force majeure' (Fuller Mill Realty, LLC v. Rhode Island Department of Revenue), and it only defines it in a footnote: "Force majeure has been defined as '[a]n event or effect that can be neither anticipated nor controlled; esp., an unexpected event that prevents someone from doing or completing something that he or she had agreed or officially planned to do.'" The Court then decided the case on the plain words of a waiver-of-hearing stipulation and never construed the clause. What Rhode Island does have is the common-law doctrines behind the clause. Frustration of purpose "excuse[s] a party from performing under a contract on the occurrence of an intervening or supervening condition that substantially frustrates the main purpose for which the parties entered into the contract", on a five-part test: "(1) the contract is partially executory, (2) a supervening event occurred after the contract was made, (3) the nonoccurrence of the event was a basic assumption on which the contract was made, (4) the occurrence frustrated the parties' principal purpose for the contract, (5) the frustration was substantial" (Tri-Town Construction Co. v. Commerce Park Associates 12, LLC). Impossibility is narrower still, and the one Rhode Island case that states it did not apply it: Lancaster v. Marshall agreed with "the well-established rule which the defendant invokes in this case, namely, that in contracts in which performance depends upon the continued existence of a certain person or thing, a condition is implied that the impossibility of performance arising from the perishing of the person or thing shall excuse the performance", then held "[b]ut that rule does not apply in the instant case because the evidence was conflicting", overruled all the defendant's exceptions and sent the case back for judgment on the verdict.
The trap
Three Rhode Island-specific hazards. First, the bar is destruction, not hardship: a party's obligation "will not be set aside merely because the performance under the contract becomes more difficult or expensive than originally anticipated", and the risk must be so severe that "the purpose underlying the contract must be totally and unforeseeably destroyed". Tri-Town rejected the 2008 financial collapse as a frustrating event for a developer's promissory note and affirmed summary judgment on the note and guaranty and the dismissal of the counterclaim, reversing only an attorney's-fee ruling. Second, the assumption has to be SHARED: Tri-Town holds that "for the doctrine of frustration of purpose to apply, both parties to the contract must share in the assumption that the particular purpose would not be frustrated", so a supplier's or lender's indifference to your purpose defeats the defence. Third, it is a shield only: "frustration of purpose — an affirmative defense against a breach of contract claim — is not a theory of liability in an affirmative cause of action", so a Rhode Island counterparty cannot sue to get its money back on that theory; Tri-Town affirmed dismissal of exactly that counterclaim. Because no Rhode Island opinion located construes a force-majeure clause, nothing here tells you how a Rhode Island court will read the words you draft, whether a catch-all sweeps in an unlisted event, whether notice is a condition, or whether the clause displaces these common-law doctrines.
12 authorities
- caseNo. 2022-122-M.P.Fuller Mill Realty, LLC v. Rhode Island Department of Revenue Division of TaxationR.I.decided 2024
The words that state the rule
Force majeure has been defined as “[a]n event or effect that can be neither anticipated nor controlled; esp., an unexpected event that prevents someone from doing or completing something that he or she had agreed or officially planned to do.” Black’s Law Dictionary 788 (11th ed. 2019).
- case139 A.3d 467Tri-Town Construction Co. v. Commerce Park Associates 12, LLCR.I.decided 2016read it at the source ↗
The words that state the rule
The main thrust behind that doctrine is to excuse a party from performing under a contract on the occurrence of an intervening or supervening condition that substantially frustrates the main purpose for which the parties entered into the contract in the first place.
- case139 A.3d 467Tri-Town Construction Co. v. Commerce Park Associates 12, LLCR.I.decided 2016read it at the source ↗
The words that state the rule
To succeed on a theory of frustration based upon the occurrence of a supervening event, a party must show that: “(1) the contract is partially executory, (2) a supervening event occurred after the contract was made, (3) the nonoccurrence of the event was a basic assumption on which the contract was made, (4) the occurrence frustrated the parties’ principal purpose for the contract, (5) the frustration was substantial.” Iannuccillo v. Material Sand & Stone Corp., 713 A.2d 1234, 1238 (R.I. 1998).
- case139 A.3d 467Tri-Town Construction Co. v. Commerce Park Associates 12, LLCR.I.decided 2016read it at the source ↗
The words that state the rule
In turn, that risk of increased difficulty or expense must be so severe that “the purpose underlying the contract must be totally and unforeseeably destroyed.” City of Warwick v. Boeng Corp., 472 A.2d 1214, 1219 (R.I. 1984)
- case139 A.3d 467Tri-Town Construction Co. v. Commerce Park Associates 12, LLCR.I.decided 2016read it at the source ↗
The words that state the rule
frustration of purpose—an affirmative defense against a breach of contract claim—is not a theory of liability in an affirmative cause of action.
The words that state the rule
We agree with the well-established rule which the defendant invokes in this case, namely, that in contracts in which performance depends upon the continued existence of a certain person or thing, a condition is implied that the impossibility of performance arising from the perishing of the person or thing shall excuse the performance. Yerrington v. Greene, 7 R. I. 589. But that rule does not apply in the instant case because the evidence was conflicting
- case139 A.3d 467Tri-Town Construction Co. v. Commerce Park Associates 12, LLCR.I.decided 2016read it at the source ↗
The words that state the rule
A party’s obligation under a contract “will not be set aside merely because the performance under the contract becomes more difficult or expensive than originally anticipated.”
- case139 A.3d 467Tri-Town Construction Co. v. Commerce Park Associates 12, LLCR.I.decided 2016read it at the source ↗
The words that state the rule
As comment a. of § 265 makes clear, for the doctrine of frustration of purpose to apply, both parties to the contract must share in the assumption that the particular purpose would not be frustrated.
The words that state the rule
All of defendant’s exceptions are overruled and the case is remitted to the superior court for the entry of judgment on the verdict.
- case139 A.3d 467Tri-Town Construction Co. v. Commerce Park Associates 12, LLCR.I.decided 2016read it at the source ↗
The words that state the rule
we affirm in part and vacate in part the judgment of the Superior Court. We affirm the Superior Court’s decision to grant summary judgment in favor of the plaintiff on claims of the breach of promissory note and breach of guaranty, as well as its dismissal of CPA’s counterclaim.
- caseNo. 2022-122-M.P.Fuller Mill Realty, LLC v. Rhode Island Department of Revenue Division of TaxationR.I.decided 2024
The words that state the rule
V Conclusion For the reasons set forth in this opinion, we quash the order of the District Court denying the Division’s motion to dismiss, and we remand the case to the District Court with directions that it enter an order dismissing the case.
The words that state the rule
A party’s performance under a contract is rendered impracticable upon the occurrence of an event or a manifestation of a circumstance the nonoccurrence of which was a basic assumption on which the contract was made. See 2 Restatement (Second) Contracts § 261 (1981); see, e.g., G.L.1956 § 6A-2-615; 18 Samuel Williston, Contracts § 1963 (3d ed.1978)
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.