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In a survey of cases in federal, state and bankruptcy courts,
commercial tenants seeking to delay or excuse the payment of rent
because of pandemic-related downturns in business sometimes looked
to the equitable doctrines of frustration of purpose and
impossibility for relief. Both of these doctrines allow for the
argument that a default is excusable under circumstances that were
unforeseeable to the parties at the time of the contract s
formation. While commercial tenants sometimes use these doctrines
in tandem, they are distinguishable in their underlying aims. The
In a survey of cases in federal, state and bankruptcy courts, commercial tenants seeking to delay or excuse the payment of rent because of pandemic-related downturns in business.
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A Wake Up Call For Commercial Landlords: Caffé Nero and
Frustration of Purpose
Old common law doctrines are not dormant and may enable tenants
to avoid the payment of rent due to government shutdown orders
during the pandemic. As more cases are tried, a jurisprudence
regarding these doctrines and their applicability to the pandemic
COVID-19 Real Estate: Mass Court on Commercial Tenant s Obligation to Pay Rent natlawreview.com - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from natlawreview.com Daily Mail and Mail on Sunday newspapers.
Friday, February 26, 2021
Commercial tenants who are unable to pay their rent as a result of COVID-19 shutdown and capacity-limit orders have, thus far, found little relief from courts, who have by and large rejected their common law defenses seeking a discharge of lease obligations. One recent Massachusetts case, however, sides with a commercial tenant, albeit under narrow circumstances, approving of the often-unsuccessful “frustration of purpose” defense.
In
UMNV 205-207 Newbury, LLC v. Caffé Nero Americas Inc., pending in Massachusetts Superior Court, the defendant tenant Caffé Nero could not make its rent payments after Massachusetts Governor Charlie Baker barred all restaurants in Massachusetts from allowing on-premises dining. In a lawsuit for damages filed by landlord UMNV, Caffé Nero argued that its rental payment obligations should be discharged under the “frustration of purpose” doctrine, which excuses a party from performing contractual obligation