impracticability and frustration

Question 1

for a contract duty to be discharged a party must

Answer 1

must show that actual performance of the contract would be so significantly different from what was originally expected as to defeat the partys legitimate expectations in entering the agreement.

Question 2

two impractical circumstances

Answer 2

Existing impracticability
Supervening impractibility

Question 3

Existing impracticability

Answer 3

Did a fact exist at the time of contract the non-existence of which was a basic assumption on which the contract was made?
- If the party did not know or have reason to know, then the excuse of existing impracticability is available

Question 4

Supervening impractibility

Answer 4

did an event occur subsequent to the contract’s formation the non-occurence of which was a basic assumption on which the contract was made?
- If so then a party may be discharged based on supervening impracticability.

Question 5

Performance must defeat the

Answer 5

party’s legitimate expectations under the agreement.

Question 6

existing impracticability elements:
BA - NK- NF - A - F

Answer 6

1. fact made the performance as agreed impracticable
2. party must not know or have reason to know @ the time of contracting
3. non-existence was a basic assumption on which the contract was made
4. the impracticability was without fault of the party
5. party has not assumed the risk

Question 7

supervening impracticability elements

E - BA - NF - A

Answer 7

1. Event Made Performance Impracticable
2. Non-Occurrence Was a Basic Assumption
3. No Fault of the Party Seeking Discharge
4. No Assumption of Risk

Question 8

on its own, something being more expensive

Answer 8

does not excuse performance.)

Question 9

questions to consider for something making performance impracticable

Answer 9

Identify the specific promised performance.

Consider:

Are there alternative methods of performance?

Has it merely become more expensive? (That alone does not excuse performance.)

Was the duty limited in the contract?

Question 10

questions to consider for basic assumption

Answer 10

What did the parties assume was necessary for performance?

Was the event unforeseen and unexpected?

Question 11

how to consider if a party assumed the risk

Answer 11

Foreseeability: Was the event reasonably expected?

Risk Bearer: Was the risk within one party’s control?

Risk Allocation: Was the risk explicitly addressed in the contract?

Circumstances: Did the context suggest an assumption of risk?

Question 12

Frustration of Purpose

Answer 12

Performance is still possible, but the principal purpose of the contract is frustrated due to a supervening event.

• Related to closely being impossible to perform. The promisor has no incentive to perform because the purpose for which the other partys performance was purchased has changed dramatically
• Can be based on facts existing at the time of contract or events arising after the time of contract and may also be temporary

Question 13

frustration of purpose elements
PK - NF - BA - VW

Answer 13

1. principal purpose is known to both parties
2. substantially frustrated without their fault by an unexpected event
3. non-occurrence was a basic assumption
4. the frustration must render the performance virtually worthless

Question 14

Courts may provide equitable relief to protect

Answer 14

reliance interests.

• The court may grant relief on such terms as justice requires including protection of the parties reliance interest
• If a party relies on a contract and put money towards it in reliance and as a result suffered, the court may grant damages