983:; and the hirer then countersued for the return of his ÂŁ25 deposit. The court determined that the cancellation of the coronation was unforeseeable by the parties, and discharged the contract, leaving the parties as they were: the hirer lost his one-third deposit, and the owner lost the rest of the rent. The court reasoned that the doctrine of "impossibility" could not be applied in this case because it was technically possible for the hirer to take possession of the flat and sit on the balcony. However, the owner knew the only reason the hirer would want to rent the flat was to watch the procession; had the hirer actually gone to the flat and sat on the balcony, he would have seen nothing of interest. Thus, the purpose of the contract had been frustrated by an outside event (the King's illness and consequent cancellation of the parade), justifying termination (but not rescission) of the contract.
856:. Frustration of purpose occurs when an unforeseen event undermines a party's principal purpose for entering into a contract such that the performance of the contract is radically different from performance of the contract that was originally contemplated by both parties, and both parties knew of the principal purpose at the time the contract was made. Despite frequently arising as a result of government action, any third party or even nature can frustrate a contracting party's primary purpose for entering into the contract. The concept is also called commercial frustration.
878:. The distinction is that impossibility concerns the duties specified in the contract, but frustration of purpose concerns the reason a party entered into the contract. An example is if entrepreneur Emily leases space from landlord Larry so that she can open a restaurant that serves only Tibetan Speckled Lizard meat. If the city rezones the property to forbid commercial uses or if the property is destroyed by a tornado, both Larry and Emily are excused from performing the contract by impossibility.
133:
25:
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is a pre-eminent case in
Australian law of frustration of a contract, applying a tripartite test, namely, an obligation under the contract is incapable of being performed, without fault of either of the parties (e.g., the parties didn't cause the frustrating event to occur), because the circumstances
900:
A circumstance is not deemed to be a "basic assumption on which the contract is made" unless the change in circumstances could not have been reasonably foreseen at the time the contract was made. As a result, it is rarely invoked successfully. Successful invocations usually come in waves during times
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Where, after a contract is made, a party's principal purpose is substantially frustrated without his fault by the occurrence of an event the non-occurrence of which was a basic assumption on which the contract was made, his remaining duties to render performance are discharged, unless the language or
881:
However, if the
Tibetan Speckled Lizard suddenly goes extinct, Emily may be excused from performing the contract because Larry knew her primary purpose for entering into the lease was to serve Tibetan Speckled Lizard, and the purpose has been frustrated. In the second scenario, the parties could
394:
863:, Joe might be exempt from the remainder of the mortgage, as the principal purpose of the contract, to have a home to live in, has been compromised. However, he might still have a
905:, when bars and taverns no longer had a reason for their leases, or during major wars, when demand for many consumer goods and services drops far below what is normal.
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3 Historically restricted in common law jurisdictions but generally accepted elsewhere; availability varies between contemporary common law jurisdictions
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For example, if Joe gets a mortgage for a new home, suppose after three years, the home is destroyed, through no fault of Joe's. Without a
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7 Specific to civil law jurisdictions, the
American
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1007:The event should have been reasonably foreseeable.
614:Contract A and Contract B in Canadian contract law
940:". Here, two parties contracted on the hire of a
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1004:The event was provided for within the contract.
891:, Section 265, defines frustration of purpose:
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1000:Frustration will not be recognised if:
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602:Duty of honest contractual performance
896:circumstances indicate the contrary.
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604:(or doctrine of abuse of rights)
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861:hell or high water clause
775:4 Specific to the German
480:Anticipatory repudiation
230:unequal bargaining power
58:"Frustration of purpose"
1039:337 (11 May 1982),
802:Uniform Commercial Code
777:BĂĽrgerliches Gesetzbuch
462:Third-party beneficiary
434:Rights of third parties
312:Accord and satisfaction
16:Defence in contract law
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846:Frustration of purpose
533:Liquidated, stipulated
378:Forum selection clause
263:Frustration of purpose
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795:Canadian contract law
163:Abstraction principle
1052:Beale (2002) p. 611.
938:sanctity of contract
624:Related areas of law
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373:Choice of law clause
338:Contract of adhesion
252:Culpa in contrahendo
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471:Breach of contract
400:UNCITRAL Model Law
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963:Taylor v Caldwell
933:Taylor v Caldwell
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903:Prohibition
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579:Restitution
390:Arbitration
1089:Categories
1041:High Court
1015:References
977:Edward VII
942:music hall
916:See also:
781:pandectist
764:common law
544:Rescission
452:Delegation
447:Assignment
235:Illegality
183:Firm offer
69:newspapers
783:tradition
653:Australia
500:Deviation
407:Mediation
140:Formation
930:case of
854:contract
746:Evidence
718:Tort law
691:Scotland
514:Remedies
457:Novation
280:Hardship
207:Defences
148:Capacity
928:English
867:on his
736:estates
668:Ireland
285:Set-off
226:Threats
221:Mistake
83:scholar
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706:Other
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