Frustration - Mar. 8

Question 1

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, what are his remaining duties? (R)

Answer 1

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 the circumstances indicate the contrary. (265)

Question 2

What is frustration of purpose? (Q)

Answer 2

A defense to a breach-of-contract claim, which provides that a party’s performance is excused if circumstances since the contract have changed, such that the principal purpose of the contract is substantially frustrated (i.e., if the other party’s performance has become virtually worthless). The event that caused the frustration of purpose must not fall within the possible risks each party assumed by entering into the contract, non-occurrence of the event must be a basic assumption under which the contract was made, and the event’s occurrence must not be the breaching party’s fault.

Question 3

What does the doctrine of frustration address? (DeLong)

Answer 3

The doctrine of frustration addresses the risk that the consideration a party receives may become unexpectedly worthless. (334)