Will our force-majeure clause, or the doctrine behind it, excuse performance in Virginia?
The doctrine will, on narrow terms: in RECP IV the county's removal of the cap on floor area ratio was such a change, and the Supreme Court of Virginia held that the circuit court was correct to sustain the impossibility defence on it, and the clause will only if the event is genuinely outside your control. Restating Hampton Roads Bankshares, the Supreme Court of Virginia said in RECP IV: "The defense of impossibility of performance is an established principle of contract law. In Virginia, it is 'well settled that where impossibility is due . . . to the fortuitous destruction or change in the character of something to which the contract related, or which by the terms of the contract was made a necessary means of performance, the promisor will be excused, unless he either expressly agreed in the contract to assume the risk of performance, whether possible or not, or the impossibility was due to his fault.'" On the clause itself, Gordonsville Energy is the only Virginia decision located that actually litigates whether an event qualified: the contract's force-majeure article required circumstances beyond the claiming party's reasonable control, the generator rotor had been designed and built by General Electric, and the Court upheld an instruction that "Although Gordonsville Energy relied on General Electric Company to design and construct the rotor, Gordonsville Energy is responsible to Virginia Power for General Electric's performance of those activities just as if Gordonsville Energy had performed them itself". The jury then found the outage was not a force majeure event.
The trap
Gordonsville is the trap in one case: a clause excusing only what is "beyond [Gordonsville's] reasonable control", as the opinion renders the contract's words, does not put your subcontractor's or supplier's performance beyond your control, and the negligence of the firm you engaged is imputed to you. The doctrinal limits cut the same way: the excuse is unavailable where the promisor expressly assumed the risk, which is exactly what a carefully drafted allocation clause does, and where the impossibility was due to his own fault.
9 authorities
- case295 Va. 268RECP IV WG Land Investors LLC v. Capital One Bank (USA), N.A.Va.decided 2018read it at the source ↗
The words that state the rule
The defense of impossibility of performance is an established principle of contract law. In Virginia, it is “well settled that where impossibility is due . . . to the fortuitous destruction or change in the character of something to which the contract related, or which by the terms of the contract was made a necessary means of performance, the promisor will be excused, unless he either expressly agreed in the contract to assume the risk of performance, whether possible or not, or the impossibility was due to his fault.”
- case257 Va. 344Gordonsville Energy, L.P. v. Virginia Electric & Power Co.Va.decided 1999read it at the source ↗
The words that state the rule
Over Gordonsville's objection, the trial court gave the jury Instruction No. 10, which stated: Gordonsville Energy is responsible to Virginia Power under the parties' contract for the design and construction of Gordonsville Energy's electric generating facility, including the steam turbine generator, its rotor and the rotor's component parts that failed in September, 1995. Although Gordonsville Energy relied on General Electric Company to design and construct the rotor, Gordonsville Energy is responsible to Virginia Power for General Electric's performance of those activities just as if Gordonsville Energy had performed them itself.
- case257 Va. 344Gordonsville Energy, L.P. v. Virginia Electric & Power Co.decided 1999read it at the source ↗
The words that state the rule
In a later section of the Contract, § 14.1, the parties agreed that an outage would be excused if it was "due solely to circumstances beyond [Gordonsville's] reasonable control . . . including . . . damage to or breakdown of power generation materials and equipment that is not caused by normal wear and tear."
- case257 Va. 344Gordonsville Energy, L.P. v. Virginia Electric & Power Co.decided 1999read it at the source ↗
The words that state the rule
Thus, under the Contract, Gordonsville remained responsible for the contractual obligations it subcontracted to General Electric and was excused from performance only if an outage also was "beyond 12 the reasonable control" of any subcontractors hired to perform Gordonsville's duties set forth in § 8.2.
- case257 Va. 344Gordonsville Energy, L.P. v. Virginia Electric & Power Co.decided 1999read it at the source ↗
The words that state the rule
The jury returned its verdict in favor of Virginia Power, finding that "the [September 1995] outage was not a force majeure event."
- case295 Va. 268RECP IV WG Land Investors LLC v. Capital One Bank (USA), N.A.Va.decided 2018read it at the source ↗
The words that state the rule
The County’s removal of the cap on FAR presented such a change relative to the performance of the FAR formula. Thus, the circuit court was also correct in sustaining Capital One’s impossibility defense, as asserted in its Plea in Bar and Motion for Summary Judgment, to WG Land’s claims that Capital One breached the FAR formula.
- case295 Va. 268RECP IV WG Land Investors LLC v. Capital One Bank (USA), N.A.Va.decided 2018read it at the source ↗
The words that state the rule
It cannot be said that Capital One was at “fault” for the legislative action taken by the County’s governing board. “Fault” in the context of the 23 impossibility doctrine implies the violation of a tort or contract duty, which WG Land has failed to either allege or establish with regard to Capital One’s lobbying efforts.
- case257 Va. 344Gordonsville Energy, L.P. v. Virginia Electric & Power Co.Va.decided 1999read it at the source ↗
The words that state the rule
In granting Instruction No. 10, the trial court ruled that the Contract did not excuse Gordonsville's failure to perform under the Contract if the failure was caused by the negligence of a subcontractor retained by Gordonsville to perform functions for which Gordonsville was responsible. Under familiar principles of contract interpretation, we reach the same conclusion and hold that the trial court did not err in granting Instruction No. 10.
- case257 Va. 344Gordonsville Energy, L.P. v. Virginia Electric & Power Co.Va.decided 1999read it at the source ↗
The words that state the rule
For these reasons, we will affirm the trial court's judgment in favor of Virginia Power on Counts I and V. We will also reverse the trial court's judgment on Count II and enter final judgment in favor of Gordonsville on that Count. Affirmed in part, reversed in part, and final judgment.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.