LAW 506-002 – Contracts II

Frustration of Purpose


Common Law
Restatement Second of Contracts § 265

Discharge by Supervening Frustration

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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 the circumstances indicate the contrary.

Restatement Second of Contracts § 266

Existing Impracticability or Frustration

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  1. Where, at the time a contract is made, a party's performance under it is impracticable without his fault because of a fact of which he has no reason to know and the non-existence of which is a basic assumption on which the contract is made, no duty to render that performance arises, unless the language or circumstances indicate the contrary.
  2. Where, at the time a contract is made, a party's principal purpose is substantially frustrated without his fault by a fact of which he has no reason to know and the non-existence of which is a basic assumption on which the contract is made, no duty of that party to render performance arises, unless the language or circumstances indicate the contrary.
Restatement Second of Contracts § 257

Effect of Urging Performance in Spite of Repudiation

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The injured party does not change the effect of a repudiation by urging the repudiator to perform in spite of his repudiation or to retract his repudiation.

Restatement Second of Contracts § 268

Effect on Other Party's Duties of a Prospective Failure Justified by Impracticability or Frustration

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  1. A party's prospective failure of performance may, except as stated in Subsection (2), discharge the other party's duties or allow him to suspend performance under the rules stated in [R2C § 251(1)] and [R2C § 253(2)] even though the failure would be justified under the rules stated in this Chapter.
  2. The rule stated in Subsection (1) does not apply if the other party assumed the risk that he would have to perform in spite of such a failure.
Restatement Second of Contracts § 269

Temporary Impracticability or Frustration

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Impracticability of performance or frustration of purpose that is only temporary suspends the obligor's duty to perform while the impracticability or frustration exists but does not discharge his duty or prevent it from arising unless his performance after the cessation of the impracticability or frustration would be materially more burdensome than had there been no impracticability or frustration.

Restatement Second of Contracts § 272

Relief Including Restitution

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  1. In any case governed by the rules stated in this Chapter, either party may have a claim for relief including restitution under the rules stated in [R2C § 240] and [R2C § 377].
  2. In any case governed by the rules stated in this Chapter, if those rules together with the rules stated in Chapter 16 will not avoid injustice, the court may grant relief on such terms as justice requires including protection of the parties' reliance interests.
Sales of Goods under the UCC

Frustration of purpose is not mentioned in the UCC. However UCC § 2-615 is interpreted as the defense.