In the recent North Carolina case of Helms v. Investment Company N. C. App. 5, the plaintiffs instituted a civil action in Mecklenburg County Superior Court to recover damages for breach of contract. The facts out of which the action arose are substantially as follows:

The plaintiffs purchased a tract of land from the defendants and simultaneously with the execution of a deed, the defendants executed a "Representation and Guaranty" which provided that defendants represent and guarantee to the purchasers that within six months water and sewer lines will be extended to the property line of the described premises, without any cost or expense to the purchasers, so as to render such water and sewer facilities available to said premises. It is understood and agreed that the purchase price being paid by the purchasers for said premises is based upon this representation and guaranty.

Defendants did not provide the water and sewer facilities as agreed and in answer to the complaint admitted the execution of the guaranty but asserted they were unable to comply with their contract because they were prohibited from doing so by the governmental authorities of the City of Charlotte and Mecklenburg County on account of potential pollution problems in the area.

From a judgment in favor of the plaintiffs, the defendants appealed to the North Carolina Court of Appeals which affirmed the lower court. In its opinion, the Appeals Court cited the following principles of contract law:

"As a general principle, nonperformance of a contract is excused where performance is rendered impossible by the law, provided the promisor is not at fault and has -not assumed the risk of performing, whether impossible or not."

"The terms of a contract may be such that, expressly or by construction, one of the parties assumes the risk of subsequent governmental interference preventing his performance of his undertaking. "

"Undoubtedly, a competent party may, by an absolute contract, bind himself to perform things which subsequently become impossible or to pay damages for the nonperformance."

"Where a party enters into a contract knowing that permission of government officers will be required during the course of performance, the fact that such permission is not forthcoming when required does not constitute an excuse for nonperformance."

"The general rule is that performance of antecedent obligations may not be excused by subsequent inability to perform on account of unexpected difficulties or unforeseen impediments, short of prevention by wrongful act or conduct of the other party to the contract."

The Court then said:

"In applying these principles of law to the present case, it seems clear that before the plaintiffs would agree to purchase the tract of land involved, they demanded assurance that water and sewer facilities would be made available within a six-month period. To induce the plaintiffs to make the purchasers, the defendants, both corporate and individual, executed a separate and unconditional guaranty that the water and sewer facilities would be provided within six months."

"This guaranty was clear and unequivocal in its terms and placed on the defendants the absolute responsibility for performance regardless of any contingency. The defendants by every reasonable interpretation assumed the risk of subsequent governmental interference which might prevent performance of their obligation. In view of the current emphasis upon pollution problems in metropolitan areas, the parties may or in the exercise of reasonable care should have anticipated that they might encounter some difficulty in providing the necessary water and sewer facilities for this particular tract of land. The insistence upon the guaranty by plaintiffs and that it be signed by the individual defendant is some indication that this likelihood was within the contemplation of the parties."

"We hold that the defendants under the terms of their guaranty to plaintiffs have assumed the risk that the governing authorities of the city of Charlotte and Mecklenburg County might interpose objections to the extension of water and sewer lines to property sold by them to the plaintiffs and are liable to the plaintiffs for any damages sustained by their failure to perform their contract."