Termination Of Contract For Frustration In Contra Costa
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FAQ
For example, if a law changes that make selling cars illegal, then contracts that involve cars will likely be frustrated. This is because the performance of that contract cannot be performed, by either party to a contract, and this arises from the illegality prohibiting performance.
Contract frustration means an occurrence of any unforeseen event which leads to the impossibility of fulfilling contractual obligations. Apart from frustration, a breach of a contract is an inability or failure to fulfill the contractual obligations of just one party, triggered by events that aren't unforeseen.
Contract end by performance. A contract can end when the parties have done all that the contract requires of them. Contract end by agreement. A contract can end when both parties agree to end it before the work is complete. Contract end by frustration. Contract end for convenience. Contract end due to a breach.
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.”
Frustration of contract will occur if one of the parties dies or becomes incapacitated. The obvious reason for this is that they can't fulfil their contractual obligations anymore. Importantly, this only applies if the party is an individual, not a company or other legal entity.
One of the most common reasons for contract termination is when one of the parties to the contract has breached the contract. This happens when a party has failed to fulfill their obligations or has acted in a way that was inconsistent with the rules set out by the contract or agreement.
Effect on the contract The case of Hirji Mulji v Cheong Yue Steamship Co Ltd 1926 AC 497 confirms the effect of frustration is that it brings the contract to an immediate end, whether or not the parties wish this to be the result. In other words, it is void, not voidable (as is the case for repudiatory breaches).
As mentioned earlier, frustration is a rare remedy in contract law. Since it discharges the contract, it effectively terminates the parties' future obligations. However, it's important to remember that frustration isn't a cure-all solution and not all contractual disputes can be resolved through this doctrine.
