Class 41: Frustration of Purpose + Spring Break Reset

Performance & Breach · Mar 15

Half doctrine, half flex; first class back from Spring Break

By the end of class, you can

Apply the frustration-of-purpose doctrine (R2d § 265; Krell v. Henry; Adbar v. New Beginnings) to a fact pattern where performance remains possible but principal purpose is destroyed.
Distinguish frustration from impossibility and impracticability on a comparative fact pattern and explain why each is narrow.
Synthesize Module VI by stating the three excuse doctrines and the foreseeability gate common to all three.

Today

Floor. ~40 min: R2d § 265 + Krell. The frustration core the exam assumes you have.

Target. ~75 min: Floor + Adbar + frustration-vs-impracticability + the three problems + synthesis.

Frustration: the doctrine

Frustration of purpose excuses performance where a supervening event destroys the principal purpose of the contract, even though performance remains physically possible. Krell states the three questions:

1. What was the foundation of the contract? — the purpose both parties understood.
2. Was that foundation destroyed by the supervening event?
3. Was the event outside the parties' contemplation at formation (i.e., not a risk either side assumed)?

Frustration is the mirror of impossibility/impracticability: those raise the cost of performing toward infinity; frustration drops the value of performance toward zero. It is narrow — the purpose must be shared, substantially destroyed, and the event unforeseeable.

R2d § 265: Discharge by Supervening Frustration

Where, after a contract is made, a party's principal purpose is substantially frustrated without his fault by the occurrence of an event the non-occurrence of which was a basic assumption on which the contract was made, his remaining duties to render performance are discharged, unless the language or the circumstances indicate the contrary.

Krell v. Henry

[1903] 2 K.B. 740 (C.A.)
Court of Appeal (England and Wales)

Rule. Where the principal purpose of a contract is frustrated by a supervening event not the fault of either party and not within the risks the parties allocated, performance is excused. Frustration of purpose differs from impossibility: performance remains possible, but its value has evaporated.

Adbar, L.C. v. New Beginnings C-Star

103 S.W.3d 799 (Mo. Ct. App. 2003)
Missouri Court of Appeals

Rule. Commercial frustration excuses performance only where an event not reasonably foreseeable by either party destroys or nearly destroys the value or purpose of the contract. A foreseeable event is deemed a risk the promisor assumed by not providing for it. The mere possibility that purpose may be frustrated, or partial difficulty, is not enough — the destruction must be total or near-total.

Excuse doctrine comparison

Three excuse doctrines branching from a supervening event: impossibility where subject matter is destroyed, impracticability where performance is possible but commercially extreme, and frustration where purpose is destroyed; all three require no fault. — All three excuse doctrines branch from one root — a supervening event neither party caused — but differ in what is destroyed: the subject matter (impossibility), the economic feasibility (impracticability), or the purpose (frustration). All three require no fault and an unforeseeable event.

Frustration vs. impracticability

Adjacent facts route to different doctrines:

Impracticability (Transatlantic) — the seller / performer invokes it; the cost of performing climbs toward infinity; performance is extremely burdensome.
Frustration (Krell / Adbar) — the buyer / recipient invokes it; the value of performance drops toward zero; performance stays easy and possible.

Both require: a supervening event, its non-occurrence a basic assumption, no fault, no risk already allocated, and the event not foreseeable. Foreseeability is the shared gate that kills most claims — including Adbar's.

Worked example: Problem 22.1 (Super Bowl LV)

Problem 22.1. On January 1, 2020, Alex contracts to buy two Super Bowl LV tickets from Will for $1,000 each, two Delta round-trip tickets from Minneapolis to Tampa for $125 each, and four nights at Colin's Tampa apartment for $500 per night. The Super Bowl is set for February 7, 2021 in Tampa. COVID-19 hits in March 2020. On December 15, 2020, Alex asks for refunds. Delta says it is still flying the route; the ticket has a $200 change fee. Colin has turned away other renters and put a $100 deposit on cleaning. Will cannot resell because the NFL has not yet announced whether fans may attend.

Question. May Alex cancel each contract? Does she have a refund right?

Stretch: Excessive Rain (Problem 22.3)

Bob, a potato broker, contracts to deliver 80 tons of potatoes to McDonald's by November 1. Excessive Midwest rain ruins the crop. Nationwide potato prices rise 25%. All of Bob's supplier relationships are Midwest farms; McDonald's knew this and contracted with other-region brokers precisely to hedge regional crop failure. Bob claims his performance is excused on impracticability grounds.

Does Bob win?

Stretch: Problem 22.2 (Lot Number 1285)

Naomi buys 3 tons of nitrogen fertilizer from Grozit. Before signing, she visits the warehouse, inspects the stock, and has 3 specific tons set aside and tagged "Lot Number 1285." The March 1 purchase agreement names "Lot Number 1285" with a May 1 delivery date. On April 15 a small fire destroys Lot 1285. Grozit has other fertilizer of the same type, but the market price has risen; Grozit insists the deal is void.

Is Grozit's performance excused?

Class summary

Frustration of purpose isolates the 'for-what' from the 'how.' Today's punchline: R2d § 265 discharges where the supervening event destroys the shared purpose, even though performance remains physically possible. The question this rule does not fully answer: when is a purpose 'basic' enough? Class 42 picks up modification: when the parties want to change their deal mid-stream, what does the law require?

Next time

Next class: Modification & Discharge

_Performance & Breach_ · Mar 16

Read Alaska Packers v. Domenico and Angel v. Murray with R2d § 89 and UCC § 2-209. Salmon fishermen demanded a wage hike mid-season, far from a labor market. The cannery agreed under pressure, then refused to pay. When may parties change a deal already in motion, and when does the law refuse to enforce the change? Come ready to answer. You may be called.