May a Contract Be Forgiven if it Becomes Impossible or Impracticable to Perform?
jahangirilawgroup
April 25, 2020

 

Introduction

In the current climate, when businesses are shutting down and economy has come to a staggering halt, many business owners are left wondering whether they are obligated to adhere to contracts they signed in good times.  In an uplifting display of collective solidarity against an invisible enemy, many obligees (persons to whom another is obligated) are making concessions by entering into deferment agreements with the obligors (persons who are bound to another) to delay performance until the pandemic subsides and the resultant shelter-in-place orders are either modified or lifted.   Some are not.  Obligees who refuse to provide concessions may have their own obligations that are not being deferred.  That being said, a person bound by a contract cannot simply stop performing without being liable for damages, unless it becomes impossible or impracticable to perform.

When Performance under a Contract May Not Be Excused?

May your obligation under a contract be extinguished (forgiven) if it becomes more expensive or more difficult to perform?  The answer likely depends on the degree of impossibility or impracticability required for one to avoid liability for breach and is likely to be decided on a case-by-case basis.  Normally, a party may not escape a contractual obligation merely because performance would be more expensive or more difficult than contemplated ( Butler v. Nepple (1960) 54 Cal. 2d 589, 599; Kennedy v. Reece (1964) 225 Cal. App. 2d 717, 725) .   If performance of a contract is possible, nonperformance can result in a breach.  If what is agreed to be done is possible and lawful, it must be done.  Otherwise, the nonperforming party must pay damages, even if the performance was rendered impracticable or even impossible by an unforeseen cause over which the party had no control ( Kennedy v. Reece (1964) 225 Cal. App. 2d 717, 725).

When Performance May Be Excused?

When the nonperformance is due to excessive and unreasonable difficulty or expense the defense of impossibility may apply ( Mineral Park Land Co. v. Howard (1916) 172 Cal. 289, 293; Christin v. Superior Court (1937) 9 Cal. 2d 526, 533)  The operative word, in this context, seems to be “excessive.”  A party invoking the impossibility defense must show that reasonable efforts were used to surmount the obstacles that prevented performance ( McCalden v. California Library Ass’n (9th Cir. 1990) 955 F.2d 1214, 1219,  cert. denied,   504 U.S. 957 (1992)).

Performance may also be excused if  the passage of a statute or ordinance, such as the shelter-in-place and social distancing orders, makes the contemplated performance illegal. ( Civ. Code § 1511(1);  Webster v. Southern Cal. First National Bank (1977) 68 Cal. App. 3d 407, 415–416).  An action for breach of contract does not lie when its performance is prevented by operation of law. ( Civ. Code , §. 1511; National Pavements Corp. v. Hutchinson Co. (1933) 132 Cal. App. 235, 238.)  As an example, if you run a day care and are unable to provide services as a result of the enactment of the shelter-in-place orders, you are not in breach.  The question becomes, can or should such a business, continue to lawfully charge fees for services it cannot provide? The answer is – probably not.

However, laws that merely make performance unprofitable or more difficult or expensive also do not excuse the duty to perform a contractual obligation ( Lloyd v. Murphy (1944) 25 Cal. 2d 48, 55).

Conclusion

Like everything else in law, where there are no bright-line rules, the question of whether performance is excused will depend on a myriad of factors, including, whether the shelter-in-place orders made it impossible, impracticable or illegal on the one hand,  or merely inconvenient, difficult or more expensive on the other hand to perform under a contract.   In the former case, the defense of impossibility will most likely prevail.  In the latter case, it will likely depend on the degree of difficulty or expense.

 

If your business is being impacted by the COVID 19 pandemic and the shelter-in-place directives, and you want to discuss options please give us a call at Jahangiri Law Group at 925-574-0100.  Although we are working from home, we are regularly receiving phone messages and promptly returning phone calls.

 

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Navigating California's Privacy Landscape: Understanding Personal and Sensitive Information Under CPRA

By Brinda Bellur, Esq. • May 28, 2025
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Customer Records Information: Signature, physical characteristics or description, telephone number, state identification card number, insurance policy number, employment, employment history, bank account number, credit card number, debit card number, or any other financial information, medical information, or health insurance information. Characteristics of Protected Classifications: Under California or federal law (e.g., age, race, religion, gender, sexual orientation). Commercial Information: Records of personal property, products or services purchased, obtained, or considered, or other purchasing or consuming histories or tendencies. Biometric Information: Physiological, biological, or behavioral characteristics, including DNA, used or intended to be used, separately or in combination with other data, to establish individual identity (e.g., fingerprints, facial recognition). Internet or Other Electronic Network Activity Information: Browse history, search history, and information regarding a consumer's interaction with an internet website, application, or advertisement. Geolocation Data: Information that indicates the precise location of an individual or device. Sensory Data: Audio, electronic, visual, thermal, olfactory, or similar information (e.g., call recordings, CCTV footage). Professional or Employment-Related Information. Inferences: Information drawn from any of the above to create a profile about a consumer reflecting the consumer's preferences, characteristics, psychological trends, predispositions, behavior, attitudes, intelligence, abilities, and aptitudes. It is important to note that personal information does not include publicly available information from federal, state, or local government records (e.g., professional licenses, public real estate records). What is "Sensitive Personal Information" (SPI) under CPRA? The CPRA introduced a new, more protected category of personal information: Sensitive Personal Information (SPI) . This subset of PI requires heightened safeguards due to its potentially intimate or revealing nature, and consumers have additional rights regarding its use and disclosure. SPI includes personal information that reveals: A consumer's Social Security number, driver's license number, state identification card, or passport number. A consumer's account log-in, financial account, debit card, or credit card number in combination with any required security or access code, password, or credentials allowing access to an account. A consumer's precise geolocation. A consumer's racial or ethnic origin, religious or philosophical beliefs, or union membership. The contents of a consumer's mail, email, and text messages, unless the business is the intended recipient of the communication. A consumer's genetic data. 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This means businesses generally cannot use or disclose SPI for other purposes, such as cross-context behavioral advertising, without explicit consumer permission. Dedicated Opt-Out Link: Businesses that use or disclose SPI for purposes other than those allowed by the CPRA must provide a "clear and conspicuous link" on their homepage(s) labeled "Limit the Use of My Sensitive Personal Information." This is in addition to the "Do Not Sell or Share My Personal Information" link for general personal information. Notice at Collection: Businesses must clearly disclose the categories of SPI collected, the purposes for which it is collected or used, and whether it is sold or shared. 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Specify retention periods for all categories of personal and sensitive information, ensuring data is not kept longer than "reasonably necessary" for the disclosed purpose. Explain consumer rights under CPRA, including the right to know, delete, correct, opt-out of sale/sharing, and limit the use of sensitive personal information. Implement Opt-Out Mechanisms: Provide "Do Not Sell or Share My Personal Information" and "Limit the Use of My Sensitive Personal Information" links on your website homepage(s) and other relevant data collection pages. Ensure these links lead to user-friendly pages where consumers can easily exercise their rights. Maintain records of opt-out requests for at least 12 months. Data Minimization and Security: Collect only the personal information and SPI that is absolutely necessary for your disclosed purposes. Implement robust security measures to protect all personal information, with heightened safeguards (e.g., encryption, access controls) for SPI. Develop a comprehensive incident response plan. Respond to Consumer Requests: Establish clear and efficient processes for responding to consumer requests to access, delete, correct, opt-out of sale/sharing, and limit the use of their personal and sensitive information. Ensure timely responses (typically within 45 days, with a possible 45-day extension). Notify service providers, contractors, and third parties to whom data has been shared when a deletion request is received. Third-Party Contracts: Review and update contracts with service providers and third parties to ensure they are also compliant with CPRA obligations, especially regarding data protection and consumer rights. Training: Provide regular training to all employees who handle personal data on CPRA requirements and best practices for data privacy and security. By diligently addressing these areas, businesses can navigate the complexities of CPRA, protect consumer privacy, and mitigate the risks of non-compliance, including significant penalties from the California Privacy Protection Agency (CPPA). For any business operating in California or collecting data from California residents, a proactive and well-informed approach to data privacy is no longer optional, but a legal imperative. Brinda Bellur is a dual-licensed attorney in California and India, with extensive experience in both litigation and transactional matters. She holds an LLM from UC SF Law (formerly UC Hastings) and certifications in privacy (CIPP/US, IAPP) and commercial contracts (UC Berkeley Law Executive Education).