As the COVID-19 pandemic and its accompanying economic fallout continue to unfold, commercial tenants have increasingly come to rely on the common law doctrines of impossibility of performance and frustration of purpose as defenses to the nonpayment of rent.

The doctrine of impossibility of performance excuses a tenant’s performance “only when the destruction of the subject matter of the contract or the means of performance makes performance objectively impossible” (Kel Kim Corp. v Cent. Markets, Inc., 70 NY2d 900, 902 [1987]). “[T]he impossibility must be produced by an unanticipated event that could not have been foreseen or guarded against in the contract” (id.); notably, however, “an economic downturn” is not such an unanticipated event (Urban Archaeology Ltd. v 207 E. 57th St. LLC, 68 AD3d 562 [1st Dept 2009]). “[I]mpossibility occasioned by financial hardship does not excuse performance of a contract” (id.). Accordingly, “where performance is possible, albeit unprofitable, the legal excuse of impossibility is not available” (Warner v Kaplan, 71 AD3d 1, 6 [1st Dept 2009]).

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