Supervening Frustration of Purpose - Explained
When a Supervening Frustration of Purpose Interrupts a Contract Obligation
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What is a Supervening Frustration of Purpose?
This is when circumstances arise that fundamentally frustrate a party's reason or purpose for entering a contract. The doctrine is similar to impracticability, but it does not relate to a party's hardship; rather it focuses on her expectation and purpose in entering the agreement. For a frustrating circumstance to relieve or excuse an obligation under a contract, the party cannot have assumed the risk of the circumstance (in the contract) or be at fault for the occurrence or the non-occurrence of the event or circumstance. Further, the occurrence or non-occurrence must have been a basic assumption on which the contract was made.
- Example: John signs up for piano playing lessons from Tara. John suffers a horrible accident that causes him to lose dexterity in his hands. This is a frustration of purpose that was unforeseeable and substantially frustrates the purpose of learning to play the piano. As such, John will be excused from performance of the contract. Suffering an economic loss is not a frustration of purpose.
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How do you feel about allowing an unforeseen event relieving a persons duty for performing a contract? How fundamental must the assumption be to the purpose of the contract? To what extent must each party understand this to be the fundamental purpose of the agreement?
Donald bids for and wins a government contract to construct a dam. The contract is subject to legislative approval. He begins preparing by entering into contracts with Lizzie for the purchase of cement. The cement supplier knows that the cement purchase is in preparation for the dam-building project. The legislator ultimately disapproves the dam project, which causes Donald to lose the contract. What is the possible result?
- This doctrine arises when an unexpected circumstance undermines the purpose of the contract. For this doctrine to apply, both parties must have been aware of the primary purpose for the contract prior to the hardship. In this example, Donald may be able to use the doctrine of frustration of purpose as a defense to avoid being liable for not following through on the cement contract with Lizzie. The question will turn on whether Donald assumed responsibility for this possibility under the contract.
- What is a Contract?
- Contract Theory Definition
- Meeting of the Minds
- Doctrine of Utmost Good Faith
- Aleatory Contract Definition
- What are the sources of contract law?
- Restatement of Contracts
- Uniform Commercial Code
- Convention on Contracts for the International Sale of Goods (CISG)
- What is a Unilateral Contract vs a Bilateral Contract?
- What is an Express Contract vs an Implied Contract?
- What are the requirements to form a Contract (Offer, Acceptance, Consideration)?
- What is an Enforceable Contract vs. a Valid Contract?
- What is a Void Contract vs a Voidable Contract?
- Adhesion Contract
- What is Mental Capacity to contract?
- What is the requirement of a Lawful Purpose?
- What are common types of Voidable Contract?
- When does an offer to contact terminate?
- Counterparty Definition
- Mirror Image Rule?
- Rule for Sale of Goods
- Silence is Not Acceptance?
- Mailbox Rule
- Shrink-wrap Agreement Definition
- Click-Wrap Agreement Definition
- What is Consideration?
- What is Promissory Estoppel?
- When is a contract required to be in writing Statute of Frauds?
- What type of writing satisfies the statute of frauds?
- Exceptions to the Statute of Fraud
- Documents Under Seal
- Who Can Sign Contracts on Behalf of a Company?
- E-Sign Act
- Privity of Contract
- Who are third-party beneficiaries to a contract?
- What is assignment and delegation of a contract?
- When is a party's Duty of performance?
- Aleatory Contract
- What is an Executed contract vs an Executory contract?
- Inchoate Definition
- Evergreen Contract
- What is Performance, Substantial Performance, and Breach of a contract?
- What is performance of a Divisible Contract?
- When is a party's duty of performance discharged?
- What are conditions to Contract (Precedent & Subsequent)?
- Abandonment Option (Contract) Definition
- Cooling Off Rule Definition
- What is tender performance of a contract?
- What are Impossibility and Impracticability
- What is a Frustration of Purpose?
- Waiver or Release from Contract
- Accord and Satisfaction
- Force Majeure Clause
- What is a Breach of Contract?
- Repudiation (Contract) Definition
- Anticipatory Repudiation
- Acceleration Clause (Contracts) Definition
- What methods exist for resolving a breach?
- What remedies exist for a breach of contract?
- Rescission (Contract)
- Exculpatory Clause
- Hold Harmless Clause
- What is Efficient Breach?
- Organization of a Contract
- How to Read the Contract
- Contract Representations & Warranties
- Contract Covenants
- What rules does a court follow in interpreting a contract?
- Allonge Definition
- What is the Parol Evidence Rule?
- What is a complete integration vs a partial integration?
- Exceptions to the Parol Evidence Rule
- Patent and Latent Ambiguity in a Contract
- Service Level Agreement Definition
- Offtake Agreement