Private Jet Service Group v. Tauck, Inc.

Whether, under New Hampshire’s common law, a Force Majeure clause that protects only one party to a contract should be deemed a relinquishment of the other party’s right to interpose the common law defenses of impossibility, impracticability, or frustratio n of commercial purpose, on the theory that the clause represents the parties’ implicit allocation of the risks identified in the Force Majeure clause to that other (unprotected) party or, alternatively, whether the common law contract defenses of impossib ility, impracticability, or frustration of commercial purpose are so fundamentally related to contract formation and purpose that they remain viable unless expressly waived.

Tauck Appendix (“T-App.”), 32 (Certification Order).

Private Jet Services Group, LLC (“PJS”) and Tauck, Inc. (“Tauck”) were parties to a contract through which PJS provided a dedicated aircraft for Tauck’s New Zealand tours for a minimum price each season. The contract is comprised of a Blanket Purchase Agreement (“BPA”) and a Statement of Work (“SOW”). T-App. 4-12 (BPA) and 14-20 (SOW). The BPA and the SOW will be collectively referred to as the “Agreement.” The Force Majeure provision in the Agreement does not exist in a vacuum. R ather, it exists in the context of the Agreement as a whole, and the Agreement contains at least three provisions that are relevant to answering the Certification Order’s two questions concerning the parties’ allocation of risk. First, the Agreement’s minimum price required Tauck to “guarantee a minimum of 50 tours per year.” T -App. 18. Second, “[n]othing in this Agreement shall be construed as to relieve Tauck from its obligation to pay [PJS] for all flights … which Tauck is otherwise committed to by this Agreement.” T-App. 16. Third, with regard to certain force majeure events, “PJS is [not] responsible for delays, losses or damages of any kind caused, in whole or in part by Force Majeure ….” T- App. 12 (BPA § 21) and 1 6 (SOW § 5 (expanding the BPA’s definition of Force Majeure events to those contemplated in this dispute)). In May 2020, after paying for 23 flights for the year, Tauck terminated the Agreement pursuant to the Adverse Economic Conditions clause that allowed either party to terminate the contract “if The Dow Jones Industrial Index … sustains a 30% decrease within a period not to exceed 75 calendar days.” T. App. 16. The Adverse Economic Conditi ons clause does not terminate the contract immediately; rather, it terminates the contract at the end of the season or within 180 days, whichever is later. T- App. 16. It also expressly states: “ Nothing contained in this Agreement shall be construed as to relieve Tauck from its obligation to pay [PJS] for all flights flown or which Tauck is otherwise committed to by this Agreement.” T-App. 16 (bold added).

No other provisions of the contract relieve Tauck of its commitment to pay PJS the contract minimu m. Accordingly, PJS pursued payment of the contract minimum price. Tauck refused to pay. PJS filed suit in the U.S. District Court for the District of New Hampshire, alleging breach of contract and seek ing payment of the contract minimum for both 2019 a nd 2020. 1 The parties filed cross -motions for summary judgment on the 2020 dispute, with PJS seeking to enforce the contract as written and Tauck attempting to avoid liability by asserting common-law affirmative defenses of impossibility, impracticabilit y, and frustration of commercial purpose. On September 30, 2022, the District Court denied both motions without prejudice stating that it was not clear whether, under New Hampshire common law, Tauck could successfully invoke those affirmative defenses where, as here, there was a Force Majeure clause in the contract that did not expressly apply to Tauck. For resolution of this issue under state law, the District Court certified the question to this Court.

On January 2, 2018, Tauck, an international tour company, and PJS, an air charter service, began their business relati onship by entering into the Air Charter Services Blanket Purchase Agreement (“BPA”). T -App. 4-12. The purpose of the BPA was to secure PJS as a source for emergency evacuations. T-App. 22, 28.

Simultaneously, the parties were discussing PJS chartering a dedicated aircraft for Tauck’s Australia and New Zealand tours. T-App. 23. Tauck awarded PJS the contract, but only for its New Zealand tours. T-App. 29.

The parties then negotiated a Statement of Work (“SOW”) that would modify and add to the underlying BPA to govern the partnership for the New Zealand tours. T-App. 23, 29. The BPA and the SOW are collectively referred to as the “Agreement.” The following sections provide an overv iew of the provisions of the Agreement relevant to the District Court’s certified question. i. Contract Minimum (Guarantee) As part of the SOW, PJS negotiated for the inclusion of a minimum contract price (“Contract Minimum”), which set a minimum number of flights Tauck must operate or pay for per season, and therefore a minimum price PJS must receive in a season. The SOW contains the following table:

T-App. 17.

The SOW also contain s Section 10, labeled Contract Minimums (Guarantee), that reads: b. Tauck must guarantee a minimum of 50 tours per year.

i. in the event of a shortfall in the number of tours operated in any Season, Tauck will pay to [PJS] the 50 tour minimum price for e applicable Season as set forth on Table 1 of this Agreement. By way of example, if Tauck operates 48 tours in the 2020 Season, Tauck will owe [PJS] an additional payment of $125, 866 (50 tour minimum less 48 tours operated = 2 tour penalty x USD $62, 933 per tour = USD $125, 866).

T-App. 18-19. ii. Force Majeure Provision The parties’ BPA contains a Force Majeure provision that the later SOW expanded. The BPA’s Force Majeure provision states: Neither Air Carrier[2] nor PJS is responsible for delays, losses or damages of any kind caused, in whole or in part by F orce Majeure, acts of war, terrorism, adverse meteorological conditions, mechanicals, air traffic control delays or other unforeseeable circumstances.

T-App. 12 (bold and footnote added). That original provision did not allow Tauck to invoke Force Majeure for any purpose. T-App. 38. Nor did it provide an avenue for any party to terminate the Agreement. When the parties negotiated the SOW, they expanded the definition of Force Majeure. The final Force Majeure provision in the SOW states: The definition of Force Majeure in the [BPA] 2017-3746 that governs this [SOW] shall be modified to include Acts of God, events of nature, epidemics, civil or military authority, strikes (other than with respect to [PJS] or labor disputes (other than with respect to [PJS]), travel advisories of the Department of State of the United States of America, war, warlike activity, acts of terrorism and/or domestic or international violence of any nature either d irectly affecting the area where this Contract is to be performed or causing disruption of travel to or from the area, or due to adverse market reaction to any of the foregoing events of Force Majeure.

T-App. 16 (italics added). The Force Majeure provisi on in the SOW does not allow Tauck to invoke it nor does it allow any party to terminate the Agreement. T-App. 38.

The updated Force Majeure provision demonstrat es that the parties contemplated the possibility of epidemics or governmental advisories th at could prevent travel. In fact, Tauck proposed that “epidemics” and “travel advisories of the Department of State of the United States of America or a similar department of another government, ” be added to the Force Majeure provision during the initial exploratory discussions. PJS Appendix (“P - App.”), 11-12 (Jan. 31, 2018 Email from Facchiano). The final draft of the provision left out the phrase “similar department of another government, ” but included “epidemics” and “travel advisories.” T-App. 16. Ultimately, although the Force Majeure provision does not expressly state that Tauck cannot raise affirmative defenses such as impracticability or frustration of purpose —the obvious consequence of allowing Tauck to raise those kinds of affirmative defenses is expressly contrary to the parties’ Agreement as a whole and implicitly contrary to the Force Majeure provision in particular. iii. Adverse Economic Conditions Clause The SOW also contain s an Adverse Economic Cond itions clause, designed by Tauck to allocate the risk of a market crash. It reads: a. During the Term, if the Dow Jones Industrial Index as published daily by the Wall Street Journal sustains a 30% decrease within a period not to exceed 75 calendar days (a “Market Correction”); and b. That either Party exercise s its rights in this Secti on 6 by providing the other party with written notice within 14 days of such Market Correction; c. Then the Agreement will automatically terminate at the later of (i) the end of the current Season and (ii) 180 calendar days from the date that written noti ce is received by the receiving party.

Nothing contained in this Agreement shall be construed as to relieve Tauck from its obligation to pay [PJS] for all flights flown or which Tauck is otherwise committed to by this Agreement.

T-App. 16 (bold added).

By March 13, 2020, Tauck was looking to use COVID -19 as pretext to terminate or to renegotiate the Agreement, specifically the Contract Minimum and t iered pricing. The parties attempted to renegotiate the Agreement but were unable to reach satisfactory terms. T-App. 50. On May 28, 2020, Tauck sent notice terminating the Agreement with PJS. P-App. 16. Tauck’s termination notice expressly invoked a nd relied upon the Adverse Economic Conditions clause in Section 6 of the SOW. Id. As surplusage to its termination notice pursuant to the Adverse Economic Conditions clause, Tauck also recognized that Force Majeure conditions had occurred under the Agreement; however, th at was not the basis for Tauck’s termination of the Agreement.

Force Majeure under the Agreement has occurred and is continuing that is directly affecting the area where the Agreement is to be performed, that is causing a disruption of travel to and from the area where the Agreement is to be performed, and that has re sulted in an ongoing adverse market reaction.

P-App. 16.

On June 9, 2020, PJS responded to Tauck’s termination of the Agreement by stating that Section 6 does not work to terminate the Agreement immediately. P-App. 18 -19. Instead, upon invocation of Section 6, the Agreement terminates at the later of two dates: (1) the end of the current Season; or (2) 180 calendar days from the date on which written notice of such invocation is received by the other party. T -App. 16. PJS also emphasized the final statement of that provision: “ Nothing contained in this Agreement shall be construed as to relieve Tauc k from its obligation to pay Supplier for all flights flown or which Tauck is otherwise committed to by this Agreement. ” P-App. 18 (bold added). PJS then advised Tauck that its obligations included the Contract Minimum, set out in Section 10 of the SOW. See P-App. 18-19. Finally, PJS informed Tauck that, although its letter referenced general Force Majeure issues, the Force Majeure provision in the Agreement did not provide a basis for Tauck to terminate the Agreement. See id. PJS attached an invoice detailing the remaining amount Tauck owed to meet the Contract Minimum. Tauck never paid that final invoice.

The District Court has posed two distinct questions to this Court: (1) Whether, under New Hampshire ’s common law, a Force Majeure clause that protects only one party to a contract should be deemed a relinquishment of the other party’s right to interpose the common law defenses of impossibility, impracticability, or frustration of commercial purpose, on the theory that the clause represents the parties’ implicit allocation of the risks identified in the Force Majeure clause to that other (unprotected) party?

(2) Whether the common law contract defenses of impossibility, impracticability, or frustration of commercial purpose are so fundamentally related to contract formation and purpose that they remain viable unless expressly waived?

See T-App. 32.

The answer to the first question is: yes. In the context of the parties’ entire Agreement, the absence of protections for Tauck in the Agreement’s Force Majeure provision is not an oversight. Rather, it is an intentional omission representing the parties’ negotiation of, and decisions concerning, the terms of the Agreement. Where the parties co ntemplated Force Majeure events and provided contractual protections to one party and not the other under the Force Majeure provision, particularly in the context of the Agreement’s other requirement of a n annual 50-flight minimum guarantee and a further r equirement that “[n]othing contained in this Agreement shall be construed as to relieve Tauck from its obligation to pay Supplier for all flights flown or which Tauck is otherwise committed to by this Agreement”—that decision implicitly and necessarily all ocates the risk of Force Majeure events to Tauck.

The answer to the second question is: no. A contractual allocation of risk, like the Force Majeure or other provision s, explicitly waives the invocation of the defenses of impossibility, impracticability, or frustration of purpose—if the contractual allocation of risk contemplates the particular intervening event —because those doctrines rely on the element of “unforeseeability”. If the risk of an event is allocated within an agreement, then the parties f oresaw the risk, allocated it accordingly, and cannot claim after-the-fact that the risk was unforeseeable. The contract does not have to state plainly that the parties waive the ability to invoke the affirmative defenses of impossibility, impracticabilit y, or frustration of purpose in order to explicitly waive them. The law is clear across the country that the contemplation of a risk within the agreement and the allocation thereof waives their invocation.

Tauck and PJS are sophisticated business entities who negotiated an agreement they believed to be beneficial to them. Tauck cannot now invoke these extracontractual defenses simply to withdraw from its bargain.

“Contracting parties are free to structure their contractual undertakings and allocate risk as they see fit. … The role of courts is not to protect parties from their own a greements, but to enforce contracts that parties enter into freely and voluntarily.” Med. Components, Inc. v. Osiris Med., Inc., 226 F. Supp. 3d 743, 7 49 (W.D. Tex. 2016) (internal citations and quotation marks omitted). While applying Texas law, the Western District of Texas was nevertheless correct that it is a foundational principle of contract jurisprudence that contracts should be enforced as written. Mills v. Nashua Fed. Sav. & Loan Ass’n, 121 N.H. 722, 726 (1981) (“Parties generally are bound by the terms of an agreement freely and openly entered into, and courts cannot make better agreements than the parties themselves have entered int o or rewrite contracts merely because they might operate harshly or inequitably.”) (italics added). Yet, that is exactly what Tauck is asking the Court to do —reallocate risks in a manner that is contrary to the parties’ contractual allocation of risk.

It is also a fundamen tal principle of contract law that “when the parties list specific items in a document, any item not so listed is typically thought to be excluded.” Smart v. Gillette Co. Long -Term Disability Plan, 70 F.3d 173, 179 (1st Cir. 1995) (applying principle of expression unius est exclusion alterius); see also, e.g., United States v. Okoye, 731 F.3d 46, 49 - 50 (1st Cir. 2013) (applying the same principle, “which instructs that when certain matters are mentioned in a contract, other similar matters not mentioned were intended to be excluded.”) (bold added); Laurin v. Providence Hosp., 150 F.3d 52, 60 (1st Cir. 1998) (same); FDIC v. Singh, 977 F.2d 18, 22 -23 (1st Cir. 1992) (same). In applying these principles in the context of force majeure or frustration of purpose, other courts have agreed that certain common law defenses are not appliable when risk is allocated within the contract. See CMA CGM S.A. v. Leader Int’l Express Corp., 474 F. Supp. 3d 807, 815 -16 (E.D. Va. 2020) (hereinafter, “Leader”).

For example, in Leader, the parties executed a service contract for the shipment of cargo. The plaintiff, CMA CGM, was the carrier responsible for shipping the cargo from the United States to Asia. The service contract specifically incorporated by reference certain tariffs, which set a price for demurrage or detainment of cargo. The service contract contained a force majeure clause which applied to both parties, but also contained a provision that applied only to one party —the carrier —which relieved it of responsibility for “de lays in transporting or delivering cargo when such delays occur on cargo detained by Customs, quarantine officials or other government required cargo inspection organizations.” Id. at 816; see also id. at 818. By relieving the carrier of responsibility for delays due to detained cargo, the tariffs and the force majeure provision placed responsibility for the payment of demurrage or detainment fees, or the co sts associated with the carrier’s inability to offload the goods, on Leader, the shipper. Id. When certain shipments that Leader intended to send via CMA CGM were seized by U.S. Customs and Border Patrol and impounded, CMA CGM sought payment from Leader for certain fees. In response, Leader claimed that the service contract was frustrated because customs delays such as the one at issue were rare and, therefore, unforeseeable, and the parties did not allocate that risk. Id. at 816. The Leader court disagreed, holding that the fact that the tariffs, which were incorporated into the service contract, specifically addressed customs delays, demonstrated that such delays were foreseeable within the industry. Id. at 817. The Court noted that the purpose of addressing the issue of custom holds in the contract through both the force majeure provision and the incorporated tariffs was to allocate the risk if there were any such seizures or delays, and that Leader assumed that risk. Because the risks were assumed by Leader, the Court determined that the frustration of purpose doctrine was inapplicable —even though the affirmative defense had not been expressly disallowed from Leader in the force majeure clause. See also in re CEC Ent., Inc., 625 B.R. 344, 358 -60 (Bankr. S.D. Tex. 2020) (noting that under the law of both North Carolina and Washington, the doctrine of frustration of purpose does not apply if the contract between the parties disclosed an allocation of that risk to one party or the other). Here, Tauck’s exclusion from the Force Majeure provision means the parties specifically decided not to allow Tauck to invoke force majeure in order to cancel flight s. That is an allocation of risk. Rather, the Agreement specifically provided Tauck with other means for terminating the Agreement and permitted Tauck to cancel flights at any time for any reason, subject to a cancellation fee if it were to do so under ce rtain circumstances. T -App. 10. But, the structure of the Agreement allocated the risk of a Force Majeure event for each individual flight to Tauck, by allowing PJS to protect itself from liability for delays, losses, or damages, and by allowing Tauck to cancel a flight at any time, for any reason, subject to cancellation fees in certain circumstances.

As in Leader, the Agreement specifically contemplated that “epidemics” could pose a risk to travel or performance of the contract, as the force majeure provision was amended to include that language, the provision was also revised to include language concerning the travel restrictions imposed by the United States Government. Tauck also contemplated that travel restrictions imposed by other governments could similarly impact contractual performance, since it prop osed (unsuccessfully) that similar language be included in the provision as well. See P-App. 11-12. It is apparent that the parties specifically negotiated the foreseeable events in the Force Majeure clause, including its language and applicability, at least twice. Pursuant to the Force Majeure provision, particularly when read in conjunction with the Agreement as a whole, the risks of travel disruptions were specifically allocated to Tauck. The Agreement also allocated the risk of p ayment in the event of termination in different ways depending on the reason for termination. See T-App. 15 (SOW § 2 (allowing Tauck to terminate with 180 days’ notice under certain conditions and obligating payment during those 180 days)); id. 15-16 (SOW § 3 (allowing Tauck to terminate without further obligation to PJS)); id. 16 (SOW § 6 (allowing Tauck to terminate at the end of the season and obligating payment through the end of the season)). Tauck chose to invoke Section 6 to terminate the Agreement, which through contractual allocation of risk, obligated it to pay the Contract Minimum for the season.

Tauck simply cannot now seek to avail itself of common -law remedies to reallocate risk where those same risks were contemplated, and the associated all ocation was specifically negotiated and agreed. To do so would amount to a judicial rewrite of this contract because Tauck now finds the terms to be unfavorable.

i. It is a general principle of contract law that if the parties allocate the risk of an event within the contract, common -law defenses cannot be used to reallocate the risk.

The overarching principle relevant to this inquiry is that a contractual Force Majeure provision or other contractual allocation of risk of the alleged intervening event preempts the common -law affirmative defenses of impossibility, impracticability, and frustration of purpose. See Commonwealth Edison Co. v. Allied -Gen. Nuclear Servs., 731 F. Supp. 850, 855 (N.D. Ill. 1990) (finding that the contractual force majeure clause superseded the impossibility doctrine) (Posner, J., sitting by designation); see also, e.g., First Nat’l Bank of Chicago v. Atl. Tele-Network Co., 946 F.2d 516, 5 21 (7 th Cir. 1991) (“The doctrine of impossibility, like the doctrine of good faith, is a gap filler; it must not be used to alter an agreed upon allocation of risk.”); N. Ind. Pub. Serv. Co. v. Carbon County Coal Co., 799 F.2d 265, 278 (7 th Cir. 1986) (“Since impossibility and related doctrines are devices for shifting risk in accordance with the parties’ presumed intentions … they have no place when the contract explicitly assigns a particular risk to one party or the other.”); 1600 Walnut Corp. v. Cole Haan Co. Store, 530 F. Supp. 3d 555, 558 (E.D. Pa. 2021) (“Only where there has been no contractual allocation of a risk should a court determine the allocation based on common law theories, such as impossibility and frustration of purpose.”); In re Condado Plaza Acquisition LLC, 620 B.R. 820, 840 (Bank r. S.D.N.Y. 2020) (stating that these affirmatives defenses are not “available if th e terms of the contract impose the relevant risks on one of the parties”); Brown v. Mid -Am. Waste Sys., Inc., 924 F. Supp. 92, 95 -96 (S.D. Ind. 1996) (not applying the doctrine of impossibility, in part, because the parties had allocated the risk within the contract); Waikiki Trader Corp. v. Rip Squeak Inc., No. 09 - 00344 ACK-BMK, 2010 WL 11530615, at *11 (D. Hawaii Apr. 15, 2010) (noting that if the alleged intervening event appears in the Force Majeure clause, then that clause controls instead of impossibility or frustration of purpose); Portnoy v. Omnicare Pharm., Inc., No. Civ.A.02 -2905 2004 WL 1535780, at *3 (E.D. Pa. June 25, 2004) (holding that frustration of purpose does not apply where “the parties contemplated such a contingency and allocated the risk between the parties”).

“[L]ike most contract doctrines, the doctrine of impossibility is an ‘off-the-rack’ provision that governs only if the parties have not drafted a specific assignment of the risk otherwise assigned by the provision.” Commonwealth Edison Co., 731 F. Supp. at 855; see also Perlman v. Pioneer Ltd. P’ship, 918 F.2d 1244, 1248 (5 th Cir. 1990) (holding that the district court erred in applying common-law force majeure principles to the Force Majeure provision in the contract); Wiggins v. Warrior River Coal Co., 696 F.2d 1356, 1359 (11 th Cir. 1983) (“Impossibility does not excuse performance where the promisor has indicat ed an intent to assume the risk thereof.”); Leader, 474 F. Supp. 3d at 817 (finding that the doctrine of impossibility did not apply where the non -performing party a ssumed the risk in the contract).

Contractual allocations of risk supersede the use of common -law affirmative defenses of impossibility and frustration of purpose because those defenses “are premised on the occurrence of an unanticipated event.” Highlands Broadway OPCO, LLC v. Barre Boss LLC, No. 21CA1735, 2023 WL 308999, at *3 (Colo. Ct. App. Jan. 19, 2023). Therefore, “neither defense applies when, through their contract, the parties allocated the risk of such an event.” Id. Where the parties foresee the possibility of an event and allocate the risk accordingly, they cannot later invoke the common -law affirmative defenses to alter that allocation of risk. See, e.g., Gap Inc. v. Ponte Gadea N.Y. LLC, 524 F. Supp. 3d 224, 237 (S.D.N.Y. 2021) (“Gap’s impossibility defense fails because the very text of the Lease demonstrates that the conditions that Gap claims render performance impossible were foreseeable.”); see also First Nat’l Bank of Chicago, 946 F.2d at 521. Allocations of risk can happen through various provisions of an agreement, not just Force Majeure. For example, in In re NTS W. USA Corp., the Southern District of New York reviewed the various allocations of risk it found in the Lease Agreement at issue, incl uding a section titled “Interruption of Access, Use or Services, ” along with its Force Majeure provision. See No. 20-CV-6692(CS), 2021 WL 4120676, at *1 (S.D.N.Y. Sept. 9, 2021). Because no provision in the Lease Agreement relieved the lessee from paying base rent and because the parties had allocated the risk of being unable to ac cess or use the premises or of laws that imposed new guidelines on use, the doctrine of frustration of purpose could not be applied to excuse the breach. Id. at *1-7.

Here, the parties allocated risk in several ways. First, the parties specifically negotiated the inclu sion of “epidemics” and “travel advisories” in the Force Majeure provision and limited its application to PJS or the Air Carrier experiencing d elays or being unable to fly a flight. P-App. 11-12; T-App. 12, 16. The Force Majeure provision does not allow Tauck to invoke the provision, nor d oes it allow either party to terminate the Agreement. T-App. 38. The parties also negotiated other provisions in the Agreement that allocated the risks of termination and the various events that could trigger termination of the Agreement or otherwise excuse performance. See T-App. 15 (SOW § 2 (allowing Tauck to term inate with 180 days’ notice under certain conditions and obligating payment during those 180 days)); id. 15-16 (SOW § 3 (allowing Tauck to terminate without further obligation to PJS)); id. 16 (SOW § 6 (allowing Tauck to terminate at the end of the season and obligating payment through the end of the season)). When the contract “spell[s] out the circumstances that would constitute a defense to [the party’s] duty to perform … with considerable specificity[, ] … it is the contract, rather than a body of judic ial doctrine, ” that the Court must interpret. Commonwealth Edison Co., 731 F. Supp. at 856.

The Contract Minimum is an explicit assignment of risk of operating fewer than fifty tours in a given year. This particular assignment of risk likens to a “fixed -price” or “take -or-pay” contract. For example, in Northern Indiana Public Service Co., Judge Posner, writing for the Seventh Circuit, stated that “a fixed -price contract is an explicit assignment of the risk of market price increases to the seller and the risk of market price decreases to the buyer.” 799 F.2d at 278. In that case, the Seventh Circuit held that, when the risk of falling prices was allocated in the contract, the buyer “cannot shift the risk back to the seller by invoking impossibility or related doctrines.” Id.

Similarly in Sabine Corp. v. ONG Western, Inc., the parties entered into a “take -or-pay” gas contract, but whe n the price of gas rose, the defendant “refused to either take or pay the contractually specified quantities.” 725 F. Supp. 1157, 1162 (W.D. Okla. 1989). The court found that, “in order for frustration of the principal purpose of a contract to be substantial, it ‘must be so severe that it is not fairly to be regarded as within the risks … assumed under the contract.’” Id. at 117 9 (quoting Cmt. a, Restatement (Second) of Contracts § 265). The court then held that, “[b]y obligating itself to pay for a min imum quantity of gas, if not taken, Defendant obviously assumed the risk of a decline in market demand under the contract.” Id. Based on that assumption of risk, the court held that there was no frustration of purpose.

Similarly, here, Tauck assumed the risk of operating fewer than fifty flights in a season by agreeing to the Contract Minimum. What is clear is that the parties contemplated the possibility of epidemics or travel advisories that decreased demand or caused market fluctuation and provided for that risk through the Adverse Economic Conditions clause. Through that clause, Tauck assumed the short -term risk of a deman d decrease by obligating itself to pay PJS through the end of the season, and PJS assumed the long-term risk of a demand decrease by allowing Tauck to terminate future years of the Agreement and decreasing its cash flow to pay for the dedicated aircraft it procured. These are assumptions of risk made by sophisticated parties negotiating a business agreement, and they must be honored. ii. Contractual allocations of the risk of superseding events constitute explicit waiver of defenses of impossibility, impracticability, and frustration of purpose.

As discussed in the preceding section, courts across the country have found that a contractual allocation of risk of certain events, through a Force Majeure provision or some other contractual provision, removes a party’s ability to invoke the common -law affirmative defenses of impossibility, impracticability, or frustration of purpose because the risks were foreseeable, and the parties contractually determined who bore the risks of those events.

Tauck and PJS are sophisticated parties who were aware of the general contractual principles governing the invocation of these extracontractual doctrines and should have known that by contemplating events like “epidemics” and “travel advisories” and market downturns and providing ways to handle those in the Agreement, either by allowing for termination at the end of the season in the case of market downtur ns, or by providing protection for delayed or cancelled flights but not allowing termination of the Agreement due to “epidemics” or “travel advisories”, that they were foregoing the option to invoke the defenses of impossibility, impracticability, or frust ration of purpose. The contract does not need to say, explicitly, “Tauck waives the ability to invoke the defenses of impossibility, impracticability, or frustration of purpose” in order to “explicitly waive” the defenses.

Even the cases Tauck cites in its brief support this interpretation of the case law. For example, Tauck cites In re Westinghouse Electric Corp. Uranium Contracts Litigation, 517 F. Supp. 440 (E.D. Va. 1981), which holds that “the defense of commercial impracticability is not available where the risk may be deemed to have been allocated.” Id. at 455. Westinghouse emphasizes that: risk allocation is determined by the totality of the circumstances, including the com parative abilities of the parties to make informed judgments as to the extent of the risk; each party’s interest in avoiding the risk; and the extent to which that interest was a factor in the negotiation of the contract.

Id. at 456 (underline added).

Here, Tauck proposed the addition of the language “epidemics” and “travel advisories” and also specifically negotiated for the Adverse Economic Conditions clause, which it ultimately invoked in order to terminate the Agreement. P-App. 11 -12; Section III.A.iii, supra. The COVID-19 pandemic hit each of these events that the parties foresaw and contracted to deal with. Tauck cannot now claim that it did not foresee and contract for those types of events in order “to withdraw from a poor bargain.” Perry v. Champlain Oil Co., 101 N.H. 97, 98 (1957).

The case law around the country is clear: contractual allocations of risk, either in a Force Majeure clause or elsewhere including in this case the Contract Minimum guarantee and the Adverse Economic Conditions provision, whether allocated to one party or the other, remove a party’s ability to claim that the risk was unforeseeable and thereby invoke the defenses of impossibility, impracticability, or frustration of purpose. Those allocations of risk constitute explicit waivers of the common -law doctrines and they should be honored as such.

PJS requests 15 minutes of oral argument before the full court to be presented by Timothy J. McLaughlin, Esq.

Pursuant to Supreme Court Rule 34, the U.S. District Court for the District of New Hampshire wrote a certification order setting forth “(1) the questions of law to be answered; and (2) a statement of all facts relevant to the questions certified and showing fully the nature of the contr oversy in which the questions arose”, which is included in Tauck’s Appendix. Pursuant to Supreme Court Rule 2 6(7), I, Timothy J. McLaughlin, hereby certify that this brief complies with the service requirements set forth in Supreme Court Rules 24(2) and 2 4(3) and that Rule 24(4) is inapplicable to these particular proceedings.

Further, I hereby certify that pursuant to Rule 16(11) of the New Hampshire Supreme Court Rules, this brief contains approximately 5, 462 words, which is less than the number of words permitted by this Court’s rules. Counsel relied upon the word count of the computer program used to prepare this brief.

Respectfully filed, on behalf of Plaintiff-Appellee,

By its attorneys,

April 19, 2023 /s/ Timothy J. McLaughlin Timothy J. McLaughlin (NH bar # 19570) Olivia F. Bensinger (NH bar # 274145) 107 Storrs Street P.O. Box 2703 Concord, NH 03302 (603) 225-7262 tmclaughlin@shaheengordon.com obensinger@shaheengordon.com

I, Timothy J. McLaughlin, Esquire, hereby certify that on this date service of the foregoing document was made upon counsel for all parties via the Court’s e-filing system.