Termination Of Contract For Frustration In Chicago
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A defendant may assert frustration of purpose where: The contract is rendered meaningless due to a frustrating event that was not reasonably foreseeable. The frustrating event totally or almost totally destroys the value of the plaintiff's performance.
The doctrine of frustration states that frustration occurs when an unforeseen event renders performance of a contract impossible or radically different from that originally contemplated by the parties. No party is considered at fault. If a contract is found to be frustrated, it is automatically terminated.
Frustration occurs whenever the law recognizes that without default of either party a contractual obligation has become incapable of being performed because the circumstances in which performance is called for would render it a thing radically different from that which was undertaken by the contract.”
When is a contract frustrated? A contract will be frustrated if a supervening event occurs which makes it impossible to perform the contractual obligations involved. Or, where that performance would be radically different because of the supervening event.
Fundamentally, frustration applies when an event occurs post-contract formation, rendering the agreement impossible to fulfil, either physically or commercially, or transforming the obligations into something entirely different from what was initially conceived.
Frustration of contract is a legal concept that allows a contract to terminate when unforeseen circumstances beyond the parties' control arise. When a contract is frustrated, parties are discharged from their future obligations under the agreement.
Contract frustration arises due to unforeseen circumstances that make performance impossible or significantly different, resulting in automatic termination. On the contrary, a breach of contract occurs when one of the parties fails to fulfill its obligations under a signed agreement.
Limitations to contract frustration Reasonably foreseeable events which could have been anticipated by the parties. For example, entering into a contract for the provision of construction services in an area which is well known to be flood prone and a flood occurs during the course of the construction.
To demonstrate frustration effectively, the following elements must be present: Supervening event – the event that leads to frustration must occur after the formation of the contract, and it must be beyond the control of the parties at the time the contract was made.
The doctrine of frustration discharges both parties from their contractual obligations where following the formation of the contract, performance of the contractual obligations become either: Impossible; or. Radically different.
