Business Law and the Regulation of Business 11th Edition by Richard Mann, Barry Roberts

Exercise 23

FACTS The Christys entered into a written contract to purchase an apartment house from Pilkinton for $30,000. Pilkinton tendered a deed to the property and demanded payment of the unpaid balance of $29,000 due on the purchase price. As a result of a decline in the Christy's used car business, the Christys did not possess and could not borrow the unpaid balance and, thus, asserted that it was impossible for them to perform their contract. This suit was brought by Pilkinton to enforce the sale of the apartment house.
DECISION Judgment for Pilkinton.
OPINION Smith, J. Proof of this kind [an inability to pay the purchase price] does not establish the type of impossibility that constitutes a defense. There is a familiar distinction between objective impossibility, which amounts to saying, ''The thing cannot be done,'' and subjective impossibility-''I cannot do it.'' [Citations.] The latter, which is well illustrated by a promisor's financial inability to pay, does not discharge the contractual duty and is therefore not a bar to a [judgment in favor of the plaintiff.]
INTERPRETATION Subjective impossibility (the promisor, but not all promisors, cannot perform) does not discharge the promisor's contractual duty.
ETHICAL QUESTION Is it fair to make contracting parties strictly liable for breach of contract? Explain.
CRITICAL THINKING QUESTION What type of fact situation would have excused the Christys' duty to perform? Explain.