Fire Destroys Contractual Obligations

Leisure Time Travel, Inc., specializes in “producing holiday tours and vacations that comport with Jewish law and tradition.” Villa Roma claims to be the last resort in the Catskills region.

In 2001, the parties entered into a contract whereby Villa Roma would be rented for five Passover holidays, from 2002 through 2006. In 2005, the parties extended the contract for five years, through 2011.

The agreement called for Leisure Time to take over the hotel approximately one week before Passover. The day before Passover in 2006, a fire destroyed the hotel. The hotel refused to return Leisure Time’s $220,000 down payment. When Villa Roma reopened in late 2008, Leisure Time contacted Villa Roma to book the hotel for the 2009-2011 Passover holidays. Villa Roma refused to allow Leisure Time to book the hotel claiming that the fire rendered the parties’ contract impossible to perform thus terminating it. Leisure Time sued claiming that it was entitled to the return of its deposit paid in 2006 and to use the hotel under the terms of the parties’ agreement.

The court found that while the contract was terminated due its impossibility of performance, Villa Roma was not entitled to be enriched by that impossibility and had to return the down payment. The court noted that while impossibility of performance is not available for a temporary impossibility, the fact that the hotel was not obligated to rebuild combined with the long duration of its unavailability was sufficient to cancel the contract. The court found further that had Leisure Time refused to return to Villa Roma after finding an alternative venue for 2007 and 2008, that refusal would have been reasonable, so that forcing Villa Roma to itself be available in 2009 would be similarly unreasonable rendering the element of “mutuality of obligation” missing from the relationship and the contract unenforceable.

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