Force Majeure and Coronavirus (COVID-19): Seven Critical Lessons from the Case Law

By: Timothy Murray, Murray, Hogue & Lannis

There is a veritable pandemic raging, and I’m not referring to COVID-19. It’s a pandemic of webinars and legal articles about force majeure and COVID-19. Sadly, no lawyer is immune from it. In force majeure article after article, we are told that the COVID-19 pandemic is unprecedented, but the only thing unprecedented may be the use of the word itself.

In fact, there is nothing novel about the novel coronavirus—at least so far as contract law is concerned. Certainly, the scope of the federal and state governments’ shutdown of businesses has been unprecedented, causing massive disruptions to the supply chain, prompting innumerable commercial tenants to declare force majeure on their rental obligations, and impelling parties to back out of all manner of deals due to economic uncertainty. But contracts are disrupted by force majeure events of all kinds, and we won’t have to wait until the COVID-19 cases meander their way through the judicial process to predict what the law will look like after it is all over. There is nothing about the pandemic that is going to shake the sturdy foundations of contract law.

One of the changes we should expect is a COVID-19-inspired term in force majeure clauses—perhaps one that mentions pandemics, epidemics, or viral outbreaks or similar terms, just as terrorism became a standard term in force majeure provisions after the September 11 terrorist attacks, and earthquakes became a standard term after the 1989 Loma Prieta quake.¹ Otherwise, force majeure clauses will still be interpreted and construed the way they are now, and the doctrines of impracticability, impossibility, and frustration of purpose will not change. And, yes, we’ll still have handshake deals, perhaps without the actual handshaking—though I confess that every night I pray that someone doesn’t start calling them elbow bump deals.

In the latest edition of the Corbin on Contracts Desk Edition, which I revised last year, we devote five chapters to these matters. In my practice, I find that these cases can be factually intense and that they allow the judge much discretion—there’s less certainty here than in other areas of contract law. In this short article, rather than present a generic laundry list of black letter legal principles, I will posit seven critical lessons that every lawyer should consider in tackling force majeure and COVID-19, and I will show that the judicial precedents dealing with past force majeure events provide critical lessons for this one—lessons that we ignore at our peril.

In a Nutshell

First, it is important to ensure that we share the same underlying premises. Excusing a party from its contractual obligations for a force majeure event is the exception. “Contract liability is strict liability. It is an accepted maxim that pacta sunt servanda, contracts are to be kept. The obligor is therefore liable in damages for breach of contract even if he or she is without fault and even if circumstances have made the contract more burdensome or less desirable than he or she had anticipated.”² But when a post-contract formation supervening event occurs, sometimes performance is excused. Here are the principal legal bases for excusing performance.

Impossibility/Impracticability

The law of impossibility, dating from the mid-19th century, required literal impossibility to excuse a party’s performance (e.g., death of the promisor or destruction of the subject matter).³ Contracting parties sought to skirt the harsh doctrine by adding force majeure clauses to their agreements that expanded the reasons to be excused from performance. Under modern contract law, impossibility has morphed into impracticability in many states, and under the modern rule, literal impossibility is no longer required. Impracticability is described in many ways, but essentially it is when a party is excused of its responsibilities because (1) performance has been made excessively burdensome—impracticable, not necessarily impossible—by a supervening event; (2) the event must not have been caused by the party seeking to be excused; (3) the event must be inconsistent with a basic assumption of the parties at the time the contract was made (instead of basic assumption, some cases—especially older cases—say that there is an implied term of the contract that the supervening event will not occur); (4) the supervening event must be, in some sense, unforeseeable—but not inconceivable⁴—in the sense that it must have been so unlikely to occur that a reasonable party would not have guarded against it in the contract; and (5) the party seeking to be excused of its obligation to perform must not have expressly or impliedly agreed to perform despite the event and that it did not assume the risk of it.

Not all states accept the modern trend, and even in some states that do, courts sometimes still call it impossibility.⁵ The Uniform Commercial Code (U.C.C.) has adopted the more progressive impracticability standard.⁶

Frustration of Purpose

The other extra-contractual defense is frustration of purpose. This aptly named doctrine focuses on the parties’ purpose in making their contract and has nothing to do with a party’s inability to perform. It applies where a supervening event fundamentally changes the nature of a contract and makes one party’s performance worthless to the other. The best explanation for it is an example. In the landmark case of Krell v. Henry,⁷ Henry rented a room from Krell for the purpose of viewing the coronation of King Edward VII. But the King fell ill, and the coronation was postponed. The very purpose of the contract—a room with a view of the coronation—was frustrated, and performance was excused.

In the wake of COVID-19, innumerable events around the world were postponed or cancelled. Every cancellation might affect other contracts. A simple frustration of purpose example: suppose a vendor rented a booth to sell T-shirts next to a large venue where a major sporting event was supposed to occur, but the sporting event is canceled due to COVID-19. The very purpose of the vendor’s contract was to capitalize on the major event, and the contract makes no sense without it. The question is, was the occurrence of the major event a basic assumption of the parties to the vendor’s rental contract?

Force Majeure Clauses in Contracts

Parties generally can allocate the risks in their contract in whatever manner they choose. The contract—not extra-contractual legal bases such as impracticability—is the starting point for discovering whether a post-formation supervening event excuses performance. “If . . . the parties include a force majeure clause in the contract, the clause supersedes the [impossibility] doctrine . . . [L]ike most contract doctrines, the doctrine of impossibility is an ‘off-the-rack’ provision that governs only if the parties have not drafted a specific assignment of the risk otherwise assigned by the provision.”⁸ Most courts seem to agree that “[w]hen parties specify certain force majeure events, there is no need to show that the occurrence of such an event was unforeseeable.”⁹ When the event is not specifically listed but a party seeks to rely on the catch-all provision of a force majeure provision, (e.g., “any other cause not enumerated herein but which is beyond the reasonable control of the party whose performance is affected”), it has been held that the event that purportedly falls within the catch-all must be unforeseeable.¹⁰

The Lessons from the Judicial Precedents About Force Majeure Events

Here are seven lessons that we should consider in dealing with questions about force majeure and COVID-19.

LESSON I: The express provisions of the contract—not extra-contractual defenses—generally will determine whether a party can be excused of its contractual obligations. If the parties expressly allocated the risks in their contract, that allocation generally will govern the parties’ rights as to that risk. If a contract spells out government action as a force majeure event, the party seeking to be excused probably will have a good argument that delays in its performance directly caused by a governmentmandated closure are excused. Here are two important examples of likely scenarios we will see in the aftermath of COVID-19:

• Case study: Commercial tenant seeking to be excused from paying rent. The government shutdowns in the wake of the COVID-19 outbreak caused innumerable commercial tenants to seek to be excused from rent and other payment obligations. In commercial leases that contain force majeure clauses, it is common to make clear that the obligation to pay rent is not excused by the occurrence of a force majeure event. In 476 Grand, LLC v. Dodge of Englewood, Inc.,¹¹ the plaintiff landlord and defendant car dealer entered into a five-year lease that contained a force majeure provision that included this sentence: “Nothing herein shall be deemed to relieve Tenant of its obligation to pay Rent when due.” The court refused to entertain defendant’s extra-contractual defenses of impracticability and frustration of purpose. The parties had expressly allocated the risk of paying the rent, regardless of the circumstances. 
• Case study: Supplier unable to perform a contract because of a breakdown elsewhere in the supply chain. The mammoth disruptions to the supply chain due to the COVID-19 pandemic caused all manner of delays in countless contracts. A problem with one link in the chain can affect many other contracts. But a supplier’s inability to obtain necessary parts or components due to a failure somewhere else in the supply chain does not necessarily excuse the supplier from its own contractual obligations. The question often is whether the parties mutually contemplated at the time the contract was formed that the supplier’s performance depended upon another party performing a critical part of the contract. Did the parties mutually contemplate that the supplier was relying on a specific source to provide a critical component? This mutual understanding generally is spelled out in the contract and not left to chance.

A simple and vivid illustration: Sunshine, which was in the business of procuring automobiles for resale, paid Luxury over $100,000 for the latter to obtain a Mercedes for it, but Luxury failed to obtain the Mercedes and never returned Sunshine’s money. Luxury claimed that it had given Sunshine’s funds to another party, B2K, to procure the vehicle, and that, for its part, B2K had entrusted the funds to yet another party to procure the vehicle—this last party absconded with the funds. Luxury refused to refund Sunshine’s money, claiming impossibility and frustration of commercial purpose. The court rejected these defenses, explaining: “Luxury reasonably should or could have considered the possibility that B2K would fail to obtain the vehicle, but Luxury nonetheless contracted to supply the vehicle to Sunshine without any contingencies.”¹² The court refused to allocate the risk for the parties since their contract did not do it.

But wait, it can get complicated—as shown by the next paragraph:

• Case study: Disruption to supply chain due to Hurricanes Katrina and Rita. Dynegy supplied natural gas to Ergon. The parties’ contract contained a provision stating that a party may invoke force majeure only if that party “remedied with all reasonable dispatch” the force majeure event. Hurricanes Katrina and Rita caused extensive damage to the gas industry’s infrastructure, and Dynegy’s own upstream suppliers declared force majeure. Dynegy, in turn, declared force majeure itself, reduced its supply to Ergon, and did not attempt to secure replacement gas (instead, it maintained contact with its upstream suppliers). The court held that Dynegy had the right to declare force majeure—its response was reasonable—and it had no duty to search for replacement gas. The court noted that Dynegy’s upstream suppliers had been designated in the parties’ initial contract, but the court did not base its holding on this fact. Rather, credible expert testimony showed that in the natural gas industry, it is reasonable for a seller to pass on force majeure in the event its own upstream suppliers have declared force majeure.¹³ The lesson: don’t forget that trade usage, course of dealing, and course of performance are used to interpret and even supplement the express terms of a contract (though it is widely agreed that at least trade usage and course of dealing can be expressly disclaimed in the contract since these refer to pre-formation facts).

LESSON II: The non-occurrence of the supervening circumstance must have been a basic assumption of the parties at the time of contracting. This requirement is at the core of many of these cases—it gives rise to numerous disputes, and it is easy to overlook in drafting:

• Case study: Disruption to business caused by Hurricane Harvey. In August 2017, Hurricane Harvey swept through Texas and Louisiana, causing catastrophic flooding and deaths. In Houston, the storm caused significant damage to a restaurant and to the nearby theater district. The restaurant was able to reopen in late September 2018, but it failed to pay rent to its landlord for three years after reopening. The landlord sued the tenant for more than half-a-million dollars in unpaid rent and late charges. Tenant claimed that it should be excused from paying rent due to frustration of purpose since the location of the theater district was one of the “biggest considerations” in entering the lease. The court rejected this argument due to the absence of evidence that the parties bargained “on the basic assumption” that an interruption would not occur—or that tenant’s restaurant would remain profitable. In fact, tenant was contractually required to obtain business interruption insurance sufficient to provide for 12 months’ rent—an indication that the parties anticipated the possibility of the kind of interruption that occurred, and that they allocated the risk of it.¹⁴
• Case study: Disruption to contract due to Avian flu. Rembrandt, a producer of egg products, sought to expand its role as a supplier to Kellogg so it planned to build a new egg processing plant. It needed an industrial egg dryer for the new plant, so it entered into an agreement to buy one from Dahmes. But then, due to an outbreak of the Avian Flu, Rembrandt put a temporary halt on the new plant—including its contract with Dahmes. Rembrandt invoked frustration of purpose, but the court held that there was a fact dispute as to whether Dahmes understood that the principal purpose of the contract was to serve the new facility in connection with Rembrandt’s anticipated expansion.¹⁵ The lesson: all parties to the contract have to share an understanding of its purpose in order for it to be a basic assumption of the contract.
• Case study: Change in government program that deprived a party of substantial revenue. In ARHC NVWELFL01, LLC v. Chatsworth At Wellington Green, LLC,¹⁶ defendant operated a skilled nursing and assisted living facility on property it leased from plaintiff. Defendant fell in arrears on the rent because, it claimed, the Centers for Medicare and Medicaid Services modified a program that deprived defendant of substantial revenue. In the ensuing litigation, defendant declared force majeure, but the court doubted that defendant’s reliance on the government program “was a fundamental tenet of the Lease Agreement, and that, in essence, its duty to pay rent was conditioned on its revenue.”¹⁷ The court added: “If a certain contractual provision is of critical importance to a contracting party—as Defendant contends regarding protection from policy-driven revenue fluctuations—it is incumbent on that party to draft the contract in such a way that the contract unambiguously reflects the desired provision.” That did not happen in this case.¹⁸ 

LESSON III: Even severe cost increases or significant market fluctuations, in and of themselves, generally do not excuse performance. This is a major theme in this area of the law. While non-performance directly caused by government closures in many cases will be enough to excuse performance, a court is far less likely to excuse performance based on more general claims that the pandemic and attendant closures made performing contracts economically burdensome or undesirable due to changed markets or economic risk.¹⁹ Even significant increased costs or market uncertainty generally are not enough to excuse a party of its obligations. While parties are free to expressly allocate in their contract increased costs or the risks of market fluctuations, the default principles of impossibility, impracticability, and frustration of purpose hardly ever does it for them:

• Case study: Disruption due to 9/11 terrorist attacks. In late 2000, OWBR contracted with Urban Network for OWBR to host a large music industry conference in mid-February 2002 at OWBR’s resort in Wailea, Hawaii. Less than 30 days prior to the event, Urban Network cancelled the event and invoked the contract’s force majeure clause, citing consumer skittishness following the September 11th terrorist attacks on America. The contract’s force majeure clause stated, inter alia: “The parties’ performance under this Agreement is subject to . . . terrorism, disaster . . . or any other emergency beyond the parties’ control, making it inadvisable . . . to perform their obligations under this Agreement.” OWBR filed suit, and the court held that the force majeure clause did not excuse performance. The court looked to the extra-contractual doctrine of impracticability for guidance and explained that “nonperformance dictated by economic hardship is not enough to fall within a force majeure provision.”²⁰ The music industry conference was “economically inadvisable,” the court conceded—and even though that economic inadvisability was the product of a force majeure event, it did not constitute objective inadvisability but was based on people’s subjective “fear and uncertainty” about flying some five months after the attacks. That is not enough to excuse contractual performance—if it were, it would render commercial transactions unpredictable.²¹ 
• Case study: Disruption due to the Suez Crisis in 1956. In the fall of 1956, Egypt nationalized the Suez Canal, touching off an international crisis that led to the canal’s closure. This spawned a number of Suez Canal cases because ships that normally would have traveled through the canal were forced to extend their voyages by thousands of miles around the Cape of Good Hope. In one celebrated case, the operator sought additional compensation for the cost of the extended voyage. The court rejected the claim, noting that given the pre-contract climate surrounding the Canal Zone, the operator was aware of potential hostilities and was willing to assume abnormal risks. The hostilities caused the operator to add $43,972.00 beyond the contract price of $305,842.92 and extending a 10,000-mile voyage by approximately 3,000 miles. Judge Skelly Wright wrote that this did not arise to the level of impracticability:

While it may be an overstatement to say that increased cost and difficulty of performance never constitute impracticability, to justify relief there must be more of a variation between expected cost and the cost of performing by an available alternative than is present in this case, where the promisor can legitimately be presumed to have accepted some degree of abnormal risk, and where impracticability is urged on the basis of added expense alone.²²

• Case study: Disruption due to tariff wars. A producer of solar panels contracted under a take-or-pay arrangement to purchase polysilicon. The contract contained a force majeure clause that excised performance arising out of or resulting from “acts of the Government.” The producer claimed that China provided illegal subsidies to Chinese companies and engaged in large-scale dumping, the United States reciprocated with tariffs, and the result was that the price of polysilicon that the parties had agreed to was significantly higher than the market price. Despite the reference to “acts of the Government” in the force majeure clause, the court held that the risk of such a change in market prices—no matter the cause—was expressly assumed by the producer in its take-or-pay contract.²³ Any other holding would undermine the purpose of contracting. Parties to a fixed price contract take market unpredictability into account in their agreed price.

LESSON IV: A temporary disability only suspends a contractual obligation; it does not permanently excuse it. When the thing that prevents performance no longer prevents it, performance generally is no longer excused. A dizzying number of cases hinge on this simple principle:

• Case study: Disruption due to bank holiday in the Great Depression. In early 1933, the Great Depression ravaged America and hysteria gripped the nation. There was a run on the banks—a frightening occurrence at a time when bank deposits were not FDIC-insured, and many banks failed. In response, federal and state governments ordered banks to close for periods ranging from a few days to a few weeks to help stabilize the banking system. In one case, when a bank closure prevented performance that was due under a contract, the court held that performance was suspended only temporarily, for the extent of the delay caused by the closure.²⁴

LESSON V: A partial disability may not suspend or excuse performance. Depending on the jurisdiction and the circumstances, it may be difficult for a business that has not been shut down completely to be excused of its obligations merely because the business was somehow hampered or restricted by a government order. Consider a manufacturer that is able to produce but at limited capacity due to the government shutdowns. Or a restaurant that is allowed to serve take-out food as opposed to full sit-down service. At what point short of a complete shutdown is performance impracticable:

• Case study: Disruption due to government restrictions on business in WW II. The celebrated case of Lloyd v. Murphy²⁵ involved the lease of property in the heart of Los Angeles signed just before the United States entered World War II. The lease restricted the lessee to sell only new automobiles. The court refused to excuse the lessee of its lease obligations, noting that it was clearly foreseeable at the time the lease was signed that new automobiles may not be available for sale. Beyond that, the court cited the lessor’s willingness to waive the lease restrictions and allow the lessee to sell used automobiles and to repair automobiles. The lessee had not been totally shut down—the value of the lease had not been totally destroyed, so the lessee was not excused.
• Case study: Disruption to television series due to writers’ strike. In 1960, television and film star James Garner was under contract with Warner Bros. to star in the studio’s television series Maverick. The contract contained a force majeure clause that excused Warner Bros.’s obligation to pay Garner if its production of shows was “prevented or materially hampered or interrupted by reason of . . . strike . . . .” In January 1960, the Writers Guild went on strike for several months, and Jack Warner, the head of the studio, declared force majeure under Garner’s contract and stopped paying Garner. In the ensuing litigation, the court found that the force majeure clause had no application because production of the Maverick series was not shut down by the strike. For example, Warner Bros. had a group of writers who continued to write anonymously during the strike under the name “W. Hermanos”—the name was an inside joke.²⁶ Moreover, Warner Bros. put out a press release insisting that production during the strike “continued at a high level.” At the trial, Jack Warner was asked if he was familiar with the press release—he bragged that he “virtually wrote it.” But he added that much of it was just “good propaganda.”²⁷ The court apparently believed the press release.

LESSON VI: The party seeking to be excused must prove that it acted with diligence and in good faith to overcome the force majeure event. If a supplier finds it difficult to perform a contract due to a COVID-19 disruption, it will need to prove that it could not reasonably work around the disruption to perform the contract. Consider a simple COVID-19 example: if a government order prevented restaurants from conducting sit-down service but allowed take-out orders, suppose a restaurant opted not to do take-outs—can it argue that it should be excused of its rent obligation due to a force majeure event? Or if a business was shut down because it was non-essential, would it have been reasonable to attempt to obtain an exemption: 

• Case study: Inability to obtain government permit because land inhabited by endangered species. The plaintiffs assigned oil and gas leases to Continental that were scheduled to expire on their own if Continental did not produce oil or gas in paying quantities by October 2015. Continental had applied for a drilling permit more than three years earlier, but the permit was delayed because the land was inhabited by the Dakota Skipper butterfly, which was listed under the Endangered Species Act. A force majeure provision in the leases stated that the leases would not terminate if drilling operations did not occur because of Continental’s inability to obtain permits due to, among other things, regulatory delay. Shortly before the October 2015 deadline, Continental sought to obtain approval to drill on a smaller unit of land that avoided the Dakota Skipper habitat. The approval was granted the following month, but plaintiffs alleged that the leases had expired in October due to Continental’s failure to drill. The court held that there was a fact issue as to whether Continental acted with diligence and in good faith in pursuing the permit to drill the land.²⁸ This case illustrates the fact-specific nature of these inquiries.

LESSON VII: A caution: there is little certainty in this area of the law. Mounting a successful defense to be excused of a contractual obligation due to a supervening event is often difficult. As discussed above, being excused is the exception— promises are supposed to be kept. Clients need to be counseled: force majeure should not be invoked lightly—if the party declaring force majeure gets it wrong, it may be in breach.²⁹ Beyond that, as the cases above illustrate, courts look very carefully at the contract to assess how the parties allocated the risk and do not freely excuse parties from their obligations. The cases are often very fact-specific and leave courts a great deal of discretion. Sometimes, courts reach results that they think are fair without regard for the niceties of contract law:

• Case study: Contract disruptions due to the 1918 Spanish flu pandemic. During the Spanish flu pandemic of 1918, state health departments closed schools for a time, and later, there was a wave of contract disputes where teachers and school bus drivers sued the school districts for their wages. The school districts argued that they were excused from paying due to impossibility. Some courts held that the school district was obliged to honor their employees’ contracts;³⁰ others held it was not.³¹ The results sometimes seemed to be result-oriented based on a belief that the school district is better able to sustain such risk than the employee. This is not a criticism of the results—just a caution that such factors are sometimes at play in the case law.

Timothy Murray, a partner in the Pittsburgh, PA law firm Murray, Hogue & Lannis, writes the biannual supplements to Corbin on Contracts, is author of Volume 1, Corbin on Contracts (rev. ed. 2018), and is co-author of the Corbin on Contracts Desk Edition (2017).

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1. See Lisa Girion, Businesses Seek a Legal Escape From Terrorism, Los Angeles Times, Oct. 14, 2001, at C1. 2. Restatement (Second) of Contracts, Ch. 11, Introductory Note. 3. E.g., Taylor v. Caldwell, 3B. & S. 826, 32 L.J., Q.B. 164 [1863] (owner of a music hall was excused of liability for failing to make the hall available due to an accidental fire that destroyed the building). 4. Specialty Tires of Am., Inc. v. CIT Group/Equipment Fin., Inc., 82 F. Supp. 2d 434, 438–439 (W.D. Pa. 2000). 5. City of Starkville v. 4-County Elec. Power Ass’n, 819 So. 2d 1216, 1224 (Miss. 2002) (“[M]any courts even use the terms [impracticability and impossibility] interchangeably.”) 6. U.C.C. § 2-615 (“Excuse by Failure of Presupposed Conditions”). 7. 2 K.B. 740 [1903]. 8. Commonwealth Edison Co. v. Allied-General Nuclear Services, 731 F. Supp. 850, 855 (N.D. Ill. 1990). In Aquila, Inc. v. C. W. Mining, 2007 U.S. Dist. LEXIS 80276, *16 (D. Utah Oct. 30, 2007), C. W. Mining sought to be excused of its contractual obligation to supply coal, but the court held that it could not invoke the extra-contractual gap-filler doctrines because the parties’ contract contained a force majeure clause that expressly spelled out when supervening events would excuse performance. The terms of the force majeure clause—including a notice requirement—had not been satisfied, so “CWM cannot rely on common law defenses and the U.C.C., thereby circumventing the terms and limitations that the parties negotiated in the Contract.” 9. TEC Olmos, LLC v. Conocophillips Co., 555 S.W.3d 176, 183 (Tex. App. 2018). See Eastern Air Lines, Inc. v. McDonnell Douglas Corp., 532 F.2d 957, 992 (5th Cir. 1976) (“[W]hen the promisor has anticipated a particular event by specifically providing for it in a contract, he should be relieved of liability for the occurrence of such event regardless of whether it was foreseeable.”); Perlman v. Pioneer P’ship, 918 F.2d 1244, 1248 (5th Cir. 1990) (“Because the clause labelled ‘force majeure’ in the Lease does not mandate that the force majeure event be unforeseeable or beyond the control of Perlman before performance is excused, the district court erred when it supplied those terms as a rule of law.”). See Sabine Corp. v. ONG Western, Inc., 725 F. Supp. 1157, 1170 (W.D. Okla. 1989) (“Plaintiff’s argument that an event of force majeure must be unforeseeable must be rejected. Nowhere does the force majeure clause specify that an event or cause must be . . . unforeseeable to be a force majeure event.”). 10. TEC Olmos, 555 S.W.3d 176. 11. 2012 N.J. Super. Unpub. LEXIS 457 (Mar. 2, 2012). 12. Sunshine Imp & Exp Corp. v. Luxury Car Concierge, Inc., 2015 U.S. Dist. LEXIS 60034 (N.D. Ill. May 7, 2015). 13. Ergon-West Va., Inc. v. Dynegy Mktg. & Trade, 706 F.3d 419 (5th Cir. 2013). 14. Bayou Place Ltd. P’ship v. Alleppo’s Grill, Inc., 2020 U.S. Dist. LEXIS 43960 (D. Md. Mar. 13, 2020). 15. Rembrandt Enters. v. Dahmes Stainless, Inc., 2017 U.S. Dist. LEXIS 144636 (D. Iowa 2017). 16. 2019 U.S. Dist. LEXIS 19264 (S.D. Fla. Feb. 5, 2008). 17. ARHC NVWELFL01, 2019 U.S. Dist. LEXIS 19264, *13. 18. ARHC NVWELFL01, 2019 U.S. Dist. LEXIS 19264, *14, n.1. 19. The increase in cost would have to be catastrophic: “In contracting for the manufacture and delivery of goods at a price fixed in the contract, . . . the seller assumes the risk of increased costs within the normal range. If, however, a disaster results in an abrupt tenfold increase in cost to the seller, a court might determine that the seller did not assume this risk by concluding that the non-occurrence of the disaster was a ‘basic assumption’ on which the contract was made. In making such determinations, a court will look at all circumstances, including the terms of the contract.” Restatement (Second) of Contracts, Ch. 11, Introductory Note. 20. OWBR LLC v. Clear Channel Communs., Inc., 266 F. Supp. 2d 1214, 1223 (D. Haw. 2003). 21. Id. Subjective impossibility—impossibility personal to the promisor due to, for example, its financial inability to perform—does not excuse performance. E. Capitol View Cmty. Dev. Corp. v. Denean, 941 A.2d 1036 (D.C. 2008). 22. Transatlantic Financing Corp. v. United States, 363 F.2d 312, 319 (D.C. Cir. 1966). 23. Kyocera Corp. v. Hemlock Semiconductor, LLC, 886 N.W.2d 445, 455 (Mich. Ct. App. 2015). The court noted that “if plaintiff had wished to protect itself from artificial market deflation because of government action (or, for that matter, excessive market downturns of any kind), it could have done so.” See also TPL, Inc. v. United States, 118 Fed. Cl. 434 (2014) (party assumed the risk in its contracts that changes in market conditions might occur and make its performance more expensive). 24. Slaughter v. C. I. T. Corp., 26 Ala. App. 234 (1934). 25. 25 Cal. 2d 48 (1944). 26. “[I]ndustry insiders knew [this] meant ‘Warner Brothers’ (W. for Warner, and Hermanos is Spanish for Brothers).” http://www.imdb.com/name/nm1149112/. 27. Warner Bros. Pictures, Inc. v. Bumgarner, 197 Cal. App. 2d 331. 28. Pennington v. Cont’l Res., Inc., 932 N.W.2d 897 (N.D. 2019). 29. See, e.g., Phillips P.R. Core, Inc. v. Tradax Petroleum Ltd., 782 F.2d 314, 321 (2d Cir. 1985) (“Phillips’ . . . refusal to pay on the grounds of force majeure constituted an anticipatory breach of the contract.”); Lazin v. Pavilion, 1995 U.S. Dist. LEXIS 15255 (E.D. Pa. Oct. 12, 1995) (repudiation may constitute a total or material breach that discharges the non-breaching party’s obligations). 30. Phelps v. School Dist., 302 Ill. 193 (1922) (the pandemic was unforeseen, and the school district could have inserted a clause excusing it of its obligations but did not); Montgomery v. Board of Educ., 102 Ohio St. 189, 193 (1921) (“The contingency which here occurred was one which might well have been foreseen and provided against in the contract, but was not.”); Crane v. School Dist., 95 Ore. 644, 655 (1920) (“‘Where no express or implied provision as to the event of impossibility can be found in the terms or circumstances of the agreement, it is a general rule of construction . . . that the promisor remains responsible for damages, notwithstanding the supervening impossibility or hardship.’”) (Citation omitted). 31. Gregg Sch. Tp. v. Hinshaw, 76 Ind. App. 503, 506 (1921) (“After the contract was entered into, and when the exigency arose, the health board, in the exercise of the police power delegated to it, closed the school, and the contract, for the time that the order was in force, was impossible of performance, and hence unenforceable, and there could be no recovery for such time.”); Sandry v. Brooklyn Sch. Dist., 47 N.D. 444, 449 (1921) (“Either party is excused if, without his fault, performance for a period becomes impossible. Such impossibility may arise upon the sickness or death of either party, or the inability of one party to give or receive performance, occasioned by the prevalence of an epidemic.”)