Perry v. Champlain Oil Co.
| Decision Date | 09 July 1957 |
| Citation | 134 A.2d 65,101 N.H. 97 |
| Parties | Richard H. PERRY v. CHAMPLAIN OIL CO., Inc. |
| Court | New Hampshire Supreme Court |
Upton, Sanders & Upton, Concord, Richard F. Upton, Concord, for plaintiff.
Wyman, Starr, Booth, Wadleigh & Langdell and Philip G. Peters, Manchester, for defendant.
The relatively modern doctrine of commercial frustration in the law of contracts is similar to the doctrine of impossibility of performance in that both require extreme hardship in order to excuse the promisor. Commercial frustration is different in that it assumes the possibility of literal performance but excuses performance because supervening events have essentially destroyed the purpose for which the contract was made. Lloyd v. Murphy, 25 Cal.2d 48, 53, 153 P.2d 47; Brown v. Oshiro, 68 Cal.App.2d 393, 156 P.2d 976. Whether the basis for commercial frustration rests on failure of consideration as suggested by 6 Williston, Contracts (Rev. ed.) s. 1954, p. 5480, note 14, or on equitable principles of allocation of risks as suggested by Corbin is not made entirely clear by the decided cases. Thus in 6 Corbin, Contracts, s. 1322, p. 256 (1951) it is said that the 'problem is that of allocating, in the most generally satisfactory way, the risks of harm and disappointment that result from supervening events.' The Restatement of Contracts, s. 288 states the rule of commercial frustration as follows: 'Where the assumed possibility of a desired object or effect to be attained by either party to a contract forms the basis on which both parties enter into it, and this object or effect is or shortly will be frustrated, a promisor who is without fault in causing the frustration, and who is harmed thereby, is discharged from the duty of performing his promise unless a contrary intention appears.'
Some authorities have taken the position that the doctrine of commercial frustration does not apply to leases but this is a minority view which we do not follow. Leonard v. Autocar Sales & Service Co., 392 Ill. 182, 64 N.E.2d 477, 163 A.L.R. 670; note, Doctrine of Commercial Frustration as Applied to Leases of Real Property, 43 Mich.L.Rev. 598. The majority of jurisdictions have held that the doctrine of frustration is applicable to leases but have indicated that there must be complete or nearly complete frustration. I American Law of Property, s. 3.104 (1952); 6 Corbin, Contracts, s. 1356. 'Even more clearly with respect to leases than in regard to ordinary contracts the applicability of the doctrine of frustration depends on the total or nearly total destruction of the purpose for which, in the contemplation of both parties, the transaction was entered into.' 6 Williston, Contracts (Rev. ed.) s. 1955, pp. 5486, 5487.
In the present case we have a fifteen-year lease with the rent fixed at one cent per gallon of gasoline sold. At the time the lease was executed the defendant was a distributor of Sunoco products and seven months later he terminated this distribution and substituted Cities Service products resulting in a decrease in sales. In the former transfer of this case we indicated that the implied finding of the Court that the 'main purpose of the agreement had not been frustrated would be sustainable' except for an error in the admission of evidence. Perry v. Champlain Oil Company, 99 N.H. 451, 453, 114 A.2d 885, 888.
The additional testimony produced at the hearing did not convince the Trial Court that the subsequent failure of the supply of Sunoco products frustrated the main purpose of the lease to a material degree sufficient to justify rescission. We think that this finding is supported by the evidence and a finding to the contrary which was requested by the plaintiff was not compelled. 'A promise will not be...
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