## Facts

- Western Properties leased vacant airport land from Cedar City and subleased a portion to Southern Utah Aviation, Inc. for a 15-year term beginning March 6, 1985.
- The sublease required Southern to construct a maintenance building that would become Western’s property at the end of the sublease term.
- Cedar City approved the sublease in July 1985 but did not approve a site/development plan for the maintenance building; without City approval, the building could not lawfully be built.
- Southern sought City approval for building plans but did not obtain the necessary approvals.
- On June 27, 1986, Southern stopped paying rent, defaulted, and abandoned the property without constructing the maintenance building.
- Western sued for accrued rent, future rent for the remaining term, and damages measured by the asserted value of the unbuilt maintenance building.

## Issues

1. Whether the sublease was a binding contract on Southern and on the individual signatory, despite a claimed lack of knowledge of the sublease’s contents.
2. Whether impossibility or frustration of purpose discharged defendants’ duties to construct the maintenance building and to pay rent beyond the abandonment date after the City refused to approve development.

## Decision

- The court held the sublease was valid and binding on Southern and the individual signatory; signing without fraud or similar misconduct bound the signer to the contract’s terms.
- The court affirmed an award to Western for rent accrued through June 27, 1986.
- The court held the City’s refusal/inability to approve the building constituted an unforeseen event, without defendants’ fault, that made the construction obligation impossible or highly impracticable; the duty to build was discharged.
- The court held the same governmental refusal frustrated the sublease’s central purpose, discharging liability for future rent after abandonment.
- The court affirmed dismissal of Western’s claims for future rent and for damages based on the value of the unconstructed building.

## Legal Principles

- A party who signs a contract is generally bound by its terms absent fraud or comparable wrongdoing.
- Impossibility/impracticability discharges a contractual duty when an unforeseen event occurring after formation, without fault of the obligated party, makes performance impossible or highly impracticable.
- The doctrines apply when a basic assumption underlying the parties’ agreement fails and the contract does not allocate that risk.
- Frustration of purpose applies when performance remains possible but the principal purpose of the contract is defeated, rendering continued performance pointless in the contractual sense.
- A party invoking impossibility/frustration must show lack of fault and reasonable efforts to perform (including efforts to obtain required approvals when relevant).

## Conclusion

The court enforced the sublease as a binding agreement but held that the City’s refusal to approve the required development discharged defendants’ duties to build and to pay rent prospectively under impossibility and frustration of purpose, limiting Western’s recovery to rent accrued before abandonment and denying future-rent and building-value damages.


Western Props. v. S. Utah Aviation, Inc., 776 P.2d 656 (Utah Ct. App. 1989)