Doctrines of Frustration of Purpose and Impossibility Apply Only When the Agreement’s Purpose is Completely Defeated, Not Partially Defeated

• Posted on: Feb 4 2026

By: Jeffrey M. Haber

The doctrine of frustration of purpose is narrowly applied.[1] “In order to invoke the doctrine of frustration of purpose, the frustrated purpose must be so completely the basis of the contract that, as both parties understood, without it, the transaction would have made little sense.”[2] In other words, the doctrine will not apply “unless the frustration is substantial.”[3]

However, “frustration of purpose … is not available where the event which prevented performance was foreseeable and provision could have been made for its occurrence”.[4]

The doctrine of impossibility “excuses a party’s performance only when the destruction of the subject matter of the contract or the means of performance makes performance objectively impossible.”[5] The “impossibility must be produced by an unanticipated event that could not have been foreseen or guarded against in the contract.”[6]

The doctrines of frustration and impossibility of performance were recently examined by the Appellate Division, First Department in Gad v. CCC NFP, Inc., 2026 N.Y. Slip Op. 00470 (1st Dept. Feb. 03, 2026).

Gad involved an agreement to provide a venue for plaintiff’s son’s bar mitzvah celebration.

Plaintiff entered into an agreement with defendant, CCC NFP, Inc. d/b/a Classic Car Club (“defendant”), to reserve an event space to host his son’s bar mitzvah celebration at the Classic Car Club at 1 Pier 76 in New York City (the “venue”). Defendant operates the venue.

Plaintiff claimed that defendant breached the agreement by failing to provide plaintiff with the venue, and that he was damaged in the amount of $52,218.75. In its answer, defendant denied the allegations and asserted numerous affirmative defenses.

Plaintiff moved, pursuant to CPLR 3212, for an order granting partial summary judgment on its breach of contract claim or, in the alternative, on its unjust enrichment claim, and an order granting plaintiff damages in the amount of $52,218.75, together with statutory interest at the rate of 9% from May 17, 2020.

Plaintiff contended that he performed under the contract to secure the venue by tendering to defendant a check in the amount of $27,218.75 (“Deposit 1”) accompanied by a $25,000.00 cash payment (“Deposit 2”). According to plaintiff, defendant did not dispute that plaintiff performed under the contract and that defendant breached the agreement by failing to provide the venue or return the deposits. Plaintiff alleged that in light of the COVID-19 restrictions on in-person gatherings, defendant attempted to reschedule the bar mitzvah celebration, but plaintiff refused, and, therefore, did not sign an addendum to the contract.

Plaintiff argued that, despite a provision in the contract that Deposit 1 was non-refundable, defendant was not entitled to retain Deposit 1 because it did not perform under the contract. Plaintiff further argued that defendant could only retain Deposit 1 if it provided plaintiff with the venue on the event date and plaintiff chose not to use the venue, or if plaintiff terminated the contract prior to the event date despite defendant’s ability to perform. In addition, plaintiff argued that the essential purpose of the contract — to hold a large party to celebrate his son’s bar mitzvah at the venue with 160 guests — was frustrated by the COVID-19 pandemic and the ensuing Executive Orders limiting in-person gatherings. According to plaintiff, given the uncertainties and limitations on in-person gatherings imposed by the COVID-19 Executive Orders and that the bar mitzvah celebration required extensive studying of the specific holy scripture that corresponded to the bar mitzvah date, rescheduling the event to a later date was not possible. Since defendant could not perform under the contract, argued plaintiff, defendant could neither retain Deposit 1 nor claim that it had incurred any expenses with respect to the bar mitzvah celebration. Plaintiff also contended that the contract did not provide that Deposit 2 was non-refundable and, as such, defendant was required to return Deposit 2, regardless of its obligations with respect to Deposit 1.

In opposition, defendant argued that the motion must be denied because Deposit 1 was, pursuant to the contract, non-refundable. In that regard, the contract provided, in pertinent part, that “[a] deposit in the amount of $27,218.75 shall be paid by Licensee to Licensor at the time of the signing of this Agreement and before Friday, December 20, 2019. This payment is not refundable.” Defendant disputed plaintiff’s allegations that the two deposits were made at the same time on December 19, 2019. Defendant maintained that the contract only required a single deposit to be made on December 20, 2019, in the amount of $27,218.75, and that plaintiff failed to provide any proof of payment of Deposit 2. According to defendant, plaintiff’s documentary evidence was not confirmation of receipt of a $25,000.00 cash deposit. Hence, defendant maintained that there was a material issue of fact with respect to the $25,000.00 deposit allegedly paid in cash.

Addressing plaintiff’s argument that Deposit 1 could not be retained for lack of consideration, defendant argued that consideration was provided because, in exchange for Deposit 1, defendant agreed, to the exclusion of other clientele, to reserve and hold exclusive for plaintiff the May 17, 2020, event date, maintained in-house staff to serve clientele, and incurred expenses in drafting the contract, the proposed addendum sent to plaintiff, and its efforts to reschedule the event. In addition, it contended that whether the contract was frustrated created a material issue of fact because plaintiff contemplated rescheduling the event to a new date. Defendant argued that the deposits were non-refundable for the additional reason that the contract lacked a force majeure provision.

In reply, plaintiff maintained that while defendant did not dispute that he paid Deposit 1 as required under the contract, defendant failed to state with certainty that Deposit 2 was not paid. According to plaintiff, defendant’s argument that Deposit 2 was not documented in its books and records did not create an issue of fact because defendant acknowledged that its representative emailed other employees in defendant’s business about the cash payment. As such, plaintiff claimed that defendant’s contention that the email concerning Deposit 2 pertained to commissions was meritless because defendant did not point to any portion of the contract that required plaintiff to pay defendant such amount, but rather, the contract specifically provided that plaintiff was to pay a deposit of $25,000.00 for the venue.

Plaintiff contended that he received no benefit from defendant reserving and holding the event date to the exclusion of other potential customers, nor did defendant suffer any detriment in doing so. Plaintiff further noted that maintaining in-house staff to serve customers was not consideration in exchange for Deposit 1 as defendant did not maintain its in-house staff solely for the bar mitzvah celebration he intended to hold at the venue. In addition, plaintiff contended that both the costs that defendant allegedly incurred with respect to drafting the contract is an ordinary cost of doing business and by no means consideration in exchange for Deposit 1, and that the expenses associated with the proposed addendum to the contract cannot be considered consideration since the efforts to reschedule the event did not arise at the time of contract.

The motion court granted plaintiff’s motion.

The motion court held that plaintiff established its prima facie entitlement to summary judgment on its breach of contract claim. The motion court observed that there was no dispute that defendant failed to provide the venue as required under the agreement.

With respect to defendant’s reliance on the frustration of purpose doctrine, the motion court accepted plaintiff’s position that the COVID‑19 restrictions on in‑person gatherings frustrated the purpose of the contract. The motion court reasoned that, without access to the venue in which the celebration was to be held, the contract would have been devoid of meaning to the parties.

Although acknowledging that the First Department has generally rejected the invocation of the COVID‑19 pandemic as a basis for applying the frustration of purpose doctrine,[7] the motion court found that the unique facts of the case warranted a different outcome. In particular, the motion court noted that, given the nature of a bar mitzvah celebration, plaintiff could not reasonably be expected to wait until the end of the pandemic to hold the event.[8]

The motion court found defendant’s arguments in opposition – e.g., that it was entitled to keep Deposit 1 because the contract included a non-refundable clause; that the contract did not include a force majeure provision; and that consideration was provided in exchange for plaintiff’s deposit when it agreed to the exclusion of other clientele to reserve and hold exclusive for plaintiff the May 17, 2020, event date, in addition to maintaining in-house staff to serve event clientele – to be unavailing. In the context of a bargained-for-exchange, said the motion court, the word non-refundable could not be construed as a license to not perform under a contract and to still retain an advance payment. The motion court noted that defendant did not provide the venue for the bar mitzvah celebration for which it entered into a contract with plaintiff, plaintiff neither agreed to a new date nor signed the addendum amending the event date, and plaintiff demanded a refund of the deposits. Therefore, the non-refundable clause did not bar plaintiff’s breach of contract claim.

The motion court also found defendant’s contention that it was entitled to retain Deposit 1 as the contract lacked a force majeure provision to be unpersuasive. The motion court explained that a party’s performance under a contract may be excused even in the absence of an express provision addressing the specific event that rendered performance impossible. The motion court determined that, although the contract did not contain a force majeure clause, the government shutdown orders prevented defendant from providing the venue on May 17, 2020, as required by the agreement.

The court further found unavailing defendant’s argument that it had furnished consideration for Deposit 1 by reserving the venue and maintaining in‑house staff for event services. Given the government shutdown orders restricting in‑person gatherings, the motion court concluded that defendant failed to demonstrate that it maintained staff specifically for plaintiff’s bar mitzvah celebration, particularly when defendant knew it could not make the venue available on the scheduled event date. Accordingly, the motion court held that the absence of a force majeure provision did not entitle defendant to retain Deposit 1.

The motion court also rejected defendant’s assertion that the parties had agreed to reschedule the event. Relying on the contract’s modification clause, providing that “[t]his Agreement shall not be modified except by written instrument subscribed by both parties,” the motion court held that, because defendant did not produce a written modification executed by both sides, its claim of a rescheduled event was without merit.

On the foregoing basis, the motion court granted plaintiff’s motion with regard to his first cause of action for breach of contract.

On appeal, the Appellate Division, First Department, unanimously affirmed.

The Court held that “[p]laintiff established prima facie that the purpose of the contract was frustrated by the COVID-19 pandemic and the executive orders issued in response to the pandemic, which prohibited ‘[n]on-essential gatherings of individuals of any size for any reason’ and was eventually extended through May 28, 2020.”[9] The Court explained that “[b]ecause the bargained-for exchange between the parties was intended to secure the timing of the event, the purpose of the contract was entirely frustrated by the COVID-19 pandemic and subsequent executive orders, and plaintiff was completely deprived of the benefit of his bargain.”[10] 

Moreover, said the Court, “although the doctrine of frustration of purpose is not available when the event that prevented performance was foreseeable, the COVID-19 pandemic and eventual prohibition on social gatherings were unforeseeable at the time the parties entered into the contract on December 18, 2019.”[11] The Court noted that “[i]n opposition, defendant failed to raise an issue of fact concerning its performance under the contract or plaintiff’s payment.”[12]

In holding that the doctrine of impossibility of performance applied, the Court made a point of distinguishing Gad from its prior jurisprudence in which it “rejected the COVID-19 pandemic as grounds for a finding of frustration of purpose or impossibility.”[13] In those actions, explained the Court, “the agreement’s purpose was not totally defeated, but was only partially defeated.”[14]

Takeaway

The doctrines of frustration of purpose and impossibility apply only in narrow circumstances – namely, when an unforeseeable event completely defeats the contract’s essential purpose or renders performance objectively impossible. In Gad, both the motion court and the First Department held that the COVID‑19 pandemic and the Executive Orders prohibiting all non‑essential gatherings completely undermined the parties’ agreement to hold a bar mitzvah celebration on a specific date at a specific venue. Because the timing and location of the celebration were central to the bargain, plaintiff was entirely deprived of the benefit of the contract when the venue could not host the event.

Importantly, Gad is distinguishable from the First Department’s prior pandemic‑related decisions, where the Court rejected frustration‑of‑purpose and impossibility claims on the ground that the agreements’ purposes were only partially, not totally, impeded. In those prior cases, performance remained possible in modified form, or the underlying contractual objective could still be achieved. By contrast, in Gad, the Executive Orders barred the very event the contract contemplated, and the contract’s purpose – securing the specific date for the bar mitzvah celebration – was entirely defeated. Thus, unlike the earlier cases, Gad presented the rare circumstance where frustration of purpose and impossibility applied. ________________________________

Jeffrey M. Haber is a partner and co-founder of Freiberger Haber LLP. This article is for informational purposes only and is not intended to be, and should not be, taken as legal advice.

[1] Jack Kelly Partners LLC v. Zegelstein, 140 A.D.3d 79, 85 (1st Dept. 2016), lv. dismissed, 28 N.Y.3d 1103 (2016).

[2] Warner v. Kaplan, 71 A.D.3d 1, 6 (1st Dept. 2009) (internal quotation marks omitted), lv. denied, 14 N.Y.3d 706 (2010).

[3] Rockland Dev. Assoc. v. Richlou Auto Body, Inc., 173 A.D.2d 690, 691 (1991).

[4] Warner, 71 A.D.3d at 6 (internal quotation marks omitted).

[5] Id. at 5.

[6] Id.

[7] See Pentagon Fed. Credit Union v. Popovic, 217A.D.3d 480, 481 (1st Dept. 2023).

[8] See Kay v. Events, 2021 N.Y. Misc. LEXIS 36371, **4-5 (Sup. Ct., Kings County 2021).

[9] Slip Op. at *1, citing Executive Order (A. Cuomo) Nos. 202.10, 202.31 (9 N.Y.C.R.R. 8.202.10, 8.202.31).

[10] Id., citing Kay v. Heavenly Events & Catering Corp., 241 A.D.3d 1305, 1306 (2d Dept. 2025).

[11] Id., citing id. at 1308.

[12] Id.

[13] Id.

[14] Id., citing Pentagon Fed. Credit Union v. Popovic, 217 A.D.3d 480, 481 (1st Dept. 2023).

Tagged with: Breach of Contract, Business Litigation, Commercial Litigation, Frustration of Purpose, Impossibility of Performance