Tenants have mostly lost “frustration of purpose” claims when they could not pay rent during Covid-19 lockdowns

In accord with most courts, the Connecticut Supreme Court held that a restaurant lease was not void for “frustration of purpose” when the restaurant tenant could not make rent payments because of a gubernatorial order for restaurants to shut down during the early stages of the Covid-19 disaster. AGW Sono Partners, LLC v. Downtown Soho, LLC, 273 A.3d 186 (Conn. 2022). The court found that the lease did not prevent the restaurant from selling food for take-out rather than for consumption in a sit-down restaurant. Nor did the lease contain a “force majeur” clause which (depending on its wording) might or might not classify the pandemic as an “act of God” or similar problem that would entitle the tenant to get out of its lease obligations.


A Massachusetts court came to the opposite conclusion when the lease language limited the tenant to operating “only a café with a sit-down restaurant menu and for no other purpose.” UMNV 205-207 Newbury, LLC v. Caffe Nero Americas, Inc., 2021 WL 956069 (Mass. Super. Ct. 2021).


A second interesting issue in the AGW Sono case was whether the landlord failed to mitigate damages when it found a new tenant to take over the lease and give it six month’s occupation rent-free as an inducement to sign the lease. The court found that the tenant had the burden of proving that this action was unreasonable or not necessary to relet the premises.
See also: Leaseholds