Explain What Is Meant by Frustration of Contract

Frustration of contract is a term used to describe a situation where a contractual agreement becomes impossible to fulfill due to unforeseeable circumstances. This situation can arise due to events beyond the control of both parties, rendering the contract void and unenforceable.

There are several instances where frustration of contract can occur. For example, a contract may become frustrated due to the death or incapacitation of one of the parties involved. In such cases, it becomes impossible to fulfill the agreement as originally intended.

Another instance where frustration of contract can occur is when the subject matter of the agreement is destroyed or no longer exists. For instance, if a company enters into a contract to lease a building, but the building is destroyed by fire before the lease begins, then the contract becomes impossible to fulfill.

Frustration of contract can also occur when events beyond the control of the parties make it impossible to fulfill the agreement. This can include natural disasters such as earthquakes, floods, or hurricanes, or unforeseeable events such as war, terrorism, or strikes.

In some cases, frustration of contract may also occur due to legal or regulatory changes that make it impossible to fulfill the agreement. For example, if a law is passed that renders a contract illegal, then the contract becomes frustrated.

When a contract becomes frustrated, both parties are released from their obligations under the agreement. However, frustration of contract does not entitle either party to damages or compensation for any losses they may have suffered as a result of the agreement becoming impossible to fulfill.

In conclusion, frustration of contract is a situation in which a contractual agreement becomes impossible to fulfill due to unforeseeable circumstances beyond the control of both parties. It is important for both parties to understand the circumstances that can lead to frustration of contract and to include provisions in their agreement that address the consequences of such a situation. As always, it is recommended that parties seek legal advice before entering into any contractual agreement.