Frustration in Contract Law

Frustration is a concept in contract law that applies when an unforeseen event occurs after the formation of a contract that makes it impossible to perform the contract as agreed, or that fundamentally changes the nature of the parties' obligations under the contract.

The principle of frustration recognises that there may be situations where events outside the control of the parties render the contract impossible or radically different from what was originally agreed, and it would be unfair to hold the parties strictly to the terms of the contract in those circumstances.

If a contract is frustrated, it is automatically terminated, and the parties are relieved of their obligations under the contract. However, the doctrine of frustration is narrowly interpreted by courts and requires a high threshold of proof. The mere fact that the contract has become more difficult or expensive to perform does not amount to frustration, and the parties are generally expected to have made provision for such contingencies in the contract itself.

Examples of events that may amount to frustration include a change in the law that makes performance of the contract illegal, destruction of the subject matter of the contract, or the death or incapacity of a party to the contract. However, each case will turn on its own facts, and the courts will carefully examine the circumstances before deciding whether or not the doctrine of frustration applies.