Dills v. Town of Enfield
210 Conn. 705 (1989)
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Rule of Law:
The doctrine of commercial impracticability does not excuse a party's performance when the contract explicitly allocates the risk of the supervening event, demonstrating that the event's nonoccurrence was not a basic assumption on which the contract was made.
Facts:
- The town of Enfield's development agency solicited developers for an industrial park and entered into a contract with Timothy E. Dills for the sale of land.
- Dills paid a $100,000 deposit toward the purchase price.
- The contract required Dills to submit construction plans and evidence of financing as conditions for the land transfer.
- Section 702(b) of the contract allowed Dills to terminate and recover his deposit if he was unable to obtain financing after submitting construction plans satisfactory to the agency.
- Section 703(b) allowed the agency to terminate and retain the deposit as liquidated damages if Dills failed to submit the required construction plans.
- Dills submitted preliminary plans but failed to submit the final, full construction plans as required by the contract.
- Despite diligent efforts, Dills was unable to secure mortgage financing for the project.
- On December 19, 1974, the agency terminated the contract for failure to submit plans, and on December 22, 1974, Dills attempted to terminate due to his inability to obtain financing.
Procedural Posture:
- Timothy Dills and Neecon Corporation sued the town of Enfield and the Enfield development agency in a state trial court to recover a $100,000 deposit.
- The trial court referred the case to a state trial referee.
- The referee conducted a hearing and recommended that judgment be entered for the plaintiffs, Dills and Neecon Corporation.
- The trial court rejected the referee’s recommendation and rendered judgment for the defendants, the town and the agency.
- The plaintiff, Neecon Corporation, appealed the trial court's judgment to the Appellate Court.
- The Supreme Court of Connecticut transferred the appeal from the Appellate Court to itself for decision.
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Issue:
Does the doctrine of commercial impracticability excuse a developer's contractual obligation to submit construction plans when the developer's inability to obtain financing, a contingency specifically addressed in the contract's termination clauses, makes submitting the plans economically burdensome?
Opinions:
Majority - Peters, C. J.
No. The doctrine of commercial impracticability does not excuse the developer's failure to submit construction plans. A party seeking to be excused under this doctrine must show that the nonoccurrence of the supervening event was a basic assumption of the contract. Here, the contract's termination clauses expressly contemplated the possibility that Dills might fail to obtain financing. Section 702(b) specifically allocated this risk by allowing termination for lack of financing only after the submission of satisfactory construction plans. Because the event was foreseeable and its risk was explicitly allocated by the sophisticated parties in their agreement, the doctrine of impracticability is inapplicable. Increased financial burden or the perceived futility of preparing the plans does not discharge a duty when the parties have bargained for and assigned the risk of such an occurrence.
Analysis:
This decision reinforces the principle that freedom of contract prevails over equitable doctrines like commercial impracticability, especially in transactions between sophisticated parties. It clarifies that foreseeability is a key element in the impracticability analysis; if a risk is foreseen and allocated within the contract, a party cannot later claim the occurrence of that risk makes performance impracticable. The ruling discourages parties from using the impracticability doctrine to escape from bad bargains or risks they explicitly assumed. It underscores the judiciary's reluctance to rewrite contracts to reallocate risks that the parties themselves have already distributed through negotiation.
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