994:; 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.
867:. 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.
889:. 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.
144:
36:
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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
911:
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
906:
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
892:
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
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874:, 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
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916:, 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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955:, for the performance of concerts. Subsequent to contract, but prior to the dates of hire, the music hall burned down. Since the contract was impossible to perform,
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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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If the defense is successfully invoked, the contract is terminated, and the parties are left as they are at the time of the litigation.
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of substantial tumult, such as after the passage of
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7 Specific to civil law jurisdictions, the
American
60:. Unsourced material may be challenged and removed.
1018:The event should have been reasonably foreseeable.
625:Contract A and Contract B in Canadian contract law
951:". Here, two parties contracted on the hire of a
1015:The event was provided for within the contract.
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801:of International Commercial Contracts
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58:adding citations to reliable sources
863:, is a defense to enforcement of a
790:and other civil codes based on the
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976:was modified in the 1903 case of
899:Restatement (Second) of Contracts
615:(or doctrine of abuse of rights)
430:Enforcement of foreign judgments
394:Hague Choice of Court Convention
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45:needs additional citations for
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423:Singapore Mediation Convention
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1072:Koffman, Macdonald, p. 520.
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872:hell or high water clause
786:4 Specific to the German
491:Anticipatory repudiation
241:unequal bargaining power
69:"Frustration of purpose"
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813:Uniform Commercial Code
788:BĂĽrgerliches Gesetzbuch
473:Third-party beneficiary
445:Rights of third parties
323:Accord and satisfaction
27:Defence in contract law
18:Frustration of contract
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857:Frustration of purpose
544:Liquidated, stipulated
389:Forum selection clause
274:Frustration of purpose
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984:coronation procession
806:Canadian contract law
174:Abstraction principle
1063:Beale (2002) p. 611.
949:sanctity of contract
635:Related areas of law
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384:Choice of law clause
349:Contract of adhesion
263:Culpa in contrahendo
169:Meeting of the minds
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411:UNCITRAL Model Law
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914:Prohibition
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401:Arbitration
1100:Categories
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1026:References
988:Edward VII
953:music hall
927:See also:
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775:common law
555:Rescission
463:Delegation
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194:Firm offer
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865:contract
757:Evidence
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468:Novation
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159:Capacity
939:English
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