The wedding celebration of Leo and Elizabeth Facto took place on a humid August night in a New York City suburb. The ceremony was complete and their reception in full swing. They had rented a beautiful banquet hall, where champagne flowed, a band played, and a photographer preserved the memories. As the 150 guests kicked up their heels, one hour into the gala, an electric power failure gripped the region. The air conditioning shut down, the music died, and picture taking stopped.

Their night ruined, the Factos sued the banquet hall for a refund of the $10,000 they paid months earlier when they signed their rental agreement. The Factos, like many people, thought a full refund was in order. After all, the Factos deserve sympathy, as they will never have their big celebration. The banquet hall countered that it was blameless for the regional power outage. It argued that the Factos had signed a contract to pay the $10,000 and they should be bound to that.