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4. Which of the following is an accurate statement?
Assume the following facts. The painter commenced work on Saturday morning and had finished half the painting by the time he quit work for the day. That night, without the fault of either party, the office building was destroyed by fire.
A business owner entered into a contract with a painter, by the terms of which the painter was to paint the owner's office for $1,000 and was required to do all of the work over the following weekend so as to avoid disruption of the owner's business.
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When the existence of a specific thing is necessary for the performance of a contractual obligation, the destruction of that thing is a supervening event that relates to a basic assumption of the contract; this effectively discharges any obligation of either party under that contract. However, any benefit conferred under the contract prior to the supervening event may be recovered in restitution.
Impracticability is a kind of impossibility that prevents the performance of a contract because it would be extremely costly, time-consuming, or otherwise impracticable, though not literally impossible to complete a full performance. According to courts, if, due to changed circumstances, performance would be infeasible from a commercial viewpoint, the promisor is excused just as he would be if performance were literally impossible.
If an event occurs during the performance of a contract that is unexpected by either of the parties at the time of the contract and which affects the feasibility of even performing the contract, both parties will be discharged by the doctrine of impossibility.
If part performance has been rendered by either party before the impossible event occurred, that party will have a right to recover in quasi-contract for the reasonable value of their partial performance. This type of recovery is permitted when contractual duties are discharged by impossibility, impracticability, or frustration of purpose.
B is correct. When the owner's office was destroyed by fire, this was a supervening event that was related to a basic assumption of the contract (that the office existed in order to be painted). As a result, the destruction of the office discharged the painter's obligation to paint and the owner's obligation to pay for the work. However, payment for the work already done is recoverable in restitution or quasi-contract.
A is incorrect. This fact pattern does not implicate impossibility, which would entirely discharge both parties' duties. As stated above, the painter can recover in restitution.
C is incorrect. Both parties' further obligations were discharged by impracticability, not an impossibility. However, the painter still has an action for restitution due to his substantial performance.
D is incorrect. Reliance damages are not recoverable by the painter because the contract was discharged due to the supervening event destroying the office. Rather, damages are recoverable in restitution or quasi-contract, as explained above.