Without a force majeure clause, will Utah excuse performance because of an event that made it impracticable?
Only narrowly. The doctrine excuses performance if an unforeseen event occurs after formation of the contract and without fault of the obligated party, and that event makes performance of the obligation impossible or highly impracticable. In Central Utah Water Conservancy District v. Upper East Union Irrigation Co. the Utah Supreme Court held that a party is not excused for impracticability when the event leading to the impracticability was known to the parties before contracting, and held the failure to perform there not excused for independent reasons: the event was not unforeseen, the party did not show performance was impracticable because it did not even attempt to obtain the required permits, and it had assumed the risk of failing to obtain them.
The trap
A party that knew of the risk when it signed, or that took on the job of obtaining approvals, cannot later call that risk impracticability; it has to allocate it in the contract. The doctrine also requires an attempt to perform: failing even to try to obtain permits defeated the defense. The attempt has to be a good faith one, and the court said that had the party sought the permits and been denied, it might have had a colorable claim.
6 authorities
- case2013 UT 67Central Utah Water Conservancy District v. Upper East Union Irrigation Co.Utahdecided 2013read it at the source ↗
The words that state the rule
A party is not excused for impracticability, however, when the event leading to the impracticability was known to the parties prior to contracting.
- case2013 UT 67Central Utah Water Conservancy District v. Upper East Union Irrigation Co.Utahdecided 2013read it at the source ↗
The words that state the rule
We hold that CUWCD's failure to perform is not excused by the doctrine of impracticability for several independent reasons. First, CUWCD cannot establish that the event giving rise to the claim of impracticability was unforeseen. Second, CUWCD failed to show that performance was impracticable because it did not even attempt to obtain the required permits. Finally, even had it attempted to do so, CUWCD assumed the risk of failing to obtain the requisite permits.
- case2013 UT 67Central Utah Water Conservancy District v. Upper East Union Irrigation Co.Utahdecided 2013read it at the source ↗
The words that state the rule
Additionally, a party may not defend on grounds of impracticability when that party takes on the risk that a supervening event will occur and render performance impracticable or impossible.
- case2013 UT 67Central Utah Water Conservancy District v. Upper East Union Irrigation Co.Utahdecided 2013read it at the source ↗
The words that state the rule
Section 7 of the Agreement, entitled "Permits for Construction," states that "CUWCD and/or its contractor shall obtain all construction permits required by all local jurisdictions and any Stream Alteration/ § 404 permits required for the reconstruction of the TCC diversion." (Emphasis added). CUWCD thus affirmatively contracted to obtain all necessary permits and assumed the risk that such permits may be difficult, or even impossible, to obtain. See Kilgore Pavement Maint., LLC v. W. Jordan City, 2011 UT App 165, ¶¶ 7-8 , 257 P.3d 460 (holding that where a party agreed that it "shall furnish and assume full responsibility for all materials," it implicitly assumed the risk that the materials may have been more expensive or more difficult to obtain than originally anticipated (emphasis added)). While CUWCD explicitly undertook the obligation of obtaining the necessary permits, its performance under the Agreement was not contingent on its ability to do so.
- case2013 UT 67Central Utah Water Conservancy District v. Upper East Union Irrigation Co.Utahdecided 2013read it at the source ↗
The words that state the rule
The doctrine of impracticability exeuses a party's performance "if an unforeseen event occurs after formation of the contract and without fault of the obligated party, which event makes performance of the obligation impossible or highly impracticable." W. Props. v. S. Utah Aviation, Inc., 776 P.2d 656, 658 (Utah Ct.App.1989) (footnotes omitted)
- case2013 UT 67Central Utah Water Conservancy District v. Upper East Union Irrigation Co.Utahdecided 2013read it at the source ↗
The words that state the rule
Additionally, there is no dispute that CUWCD has not yet applied for or otherwise sought to obtain the permits necessary to undertake the replacement of the TCC Diversion. While CUWCD's replacement of the TCC Diversion may be "inconsistent with evolving LPRDS objectives," without a good faith attempt to obtain the necessary permits, CUWCD cannot establish that performance is impracticable. Thus, even assuming that CUWCD did not know of the LPRDS Project prior to execution of the Agreement, had CUWCD sought to obtain permits and been denied, it might have a colorable claim for impracticability. - But here, where CUWCD has not even attempted to obtain the necessary permits, it cannot reasonably make such a claim.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.