Also known as: frustration of purpose · doctrine of frustration of purpose · commercial frustration
Written by attorneys — see sources below.
A doctrine discharging a party's remaining contractual duties when an unforeseen event substantially frustrates the principal purpose of the contract without the party's fault, provided the non-occurrence of the event was a basic assumption underlying the agreement. Temporary frustration suspends performance only while the condition lasts and does not discharge the duty unless later performance would be materially more burdensome.
Finn Fletcher leased retail space from Flora Ford for five years to sell luxury goods to hotel guests. A fire closed the adjacent hotel for eight months. Fletcher suspended operations during the closure but resumed once the hotel reopened. Because the frustration lasted only temporarily and resumption imposed no materially greater burden, Fletcher's rent duty was suspended for those months and then revived.
Fernando Farrell leased rooftop space from Freeman Engineering to install a cellular antenna serving crowds at a nearby stadium. After an earthquake demolished the stadium and the site became low-density housing, Farrell stopped paying rent. The permanent loss of the event-driven customer base substantially frustrated the lease's principal purpose, discharging Farrell's remaining duties.
Joseph A. Richardson and Ida Richardson divorced in December 1997. They executed a separation agreement providing that Joseph would pay Ida maintenance of $2,425.00 per month, terminating upon Ida’s remarriage or the death of either party. The agreement stated that its terms would not be subject to modification or change, regardless of the relative circumstances of the parties. The trial court incorporated the agreement into the Judgment and Decree of Dissolution and stated that maintenance was non-modifiable. In 2004 Joseph filed a motion to modify the judgment. In Count II he alleged that Ida sought out persons to burglarize his home, sought out persons to murder him, and attempted to hire a person to murder him. He further alleged that these acts breached the separation agreement, violated public policy, committed criminal acts, and waived any claim to maintenance. The trial court dismissed Count II with prejudice for failure to state a claim upon which relief can be granted. The dismissal order was certified as a final judgment and order under Rule 74.01(b). Joseph appealed the dismissal. The Eastern District Court of Appeals transferred the matter to the Supreme Court of Missouri.
View caseThe party must show that its principal purpose was substantially frustrated by an unforeseen event occurring without its fault and that the non-occurrence of the event was a basic assumption on which the contract was made. Contract language allocating the risk can preclude discharge.
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No. A mere decline in profits or customer traffic does not discharge duties. The principal purpose must be substantially destroyed, not merely made less lucrative.
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Existing frustration applies when an unknown fact existing at the time of contracting destroys the principal purpose. Supervening frustration arises from an event occurring after formation. Both require the same core elements of substantial frustration and basic assumption.
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Yes. When the contract allocates the risk of the frustrating event through a force-majeure or similar clause, courts generally enforce that allocation and deny discharge.
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