Editing Contracts/Frustration of purpose
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Despite frequently arising as a result of government action, any third party or even nature can frustrate a contracting party's primary purpose for entering into the contract. The concept is also called commercial frustration. | Despite frequently arising as a result of government action, any third party or even nature can frustrate a contracting party's primary purpose for entering into the contract. The concept is also called commercial frustration. | ||
For example, if Joe gets a mortgage for a new home, suppose after three years, the home is destroyed, | For example, if Joe gets a mortgage for a new home, suppose after three years, the home is destroyed, with no fauly of Joe's. Without a [[hell or high water clause]], Joe might be exempt from the remainder of the mortgage, as the principal purpose of the contract, to have a home to live in, has been compromised. However, he might still have a [[foreclosure]] on his [[credit rating]]. | ||
Frustration of purpose is often confused with the closely related doctrine of [[impossibility]]. The distinction is that impossibility concerns the duties specified in the contract, but frustration of purpose concerns the reason a party entered into the contract. An example is if entrepreneur Emily leases space from landlord Larry so that she can open a restaurant that serves only Tibetan Speckled Lizard meat. If the city rezones the property to forbid commercial uses or if the property is destroyed by a tornado, both Larry and Emily are excused from performing the contract by impossibility. | Frustration of purpose is often confused with the closely related doctrine of [[impossibility]]. The distinction is that impossibility concerns the duties specified in the contract, but frustration of purpose concerns the reason a party entered into the contract. An example is if entrepreneur Emily leases space from landlord Larry so that she can open a restaurant that serves only Tibetan Speckled Lizard meat. If the city rezones the property to forbid commercial uses or if the property is destroyed by a tornado, both Larry and Emily are excused from performing the contract by impossibility. |