CONTRACTSChapter 5. Defining Performance Obligations: Conditions and Excuses
Ch.5.B.3
Frustration of Purpose
1
KRELL v. HENRY
Krellv. Henry
What is the contract’s subject?Is it impossible for Henry to perform?What does the court decide?Was the risk of the cancellation of the coronation foreseeable?Why not argue impracticability?CanKrellbe distinguished fromSub-Zero Freezer Co.?
Ch.5.B.3
Frustration of Purpose
3
Doctrine of Frustration of Purpose
A party’s duty is discharged ifPrincipal purposeissubstantially frustratedby occurrence of event after K is madeNon-occurrence of event was a basic assumption on which K was madeNeither party is at faultUnless the language or the circumstances indicate the contrary.Rest. (2d) 265Compare to Doctrine of Impracticability(*underlinedlanguage)
Monday, November 7
Impossibility & Frustration of Purpose
4
Northern Indiana Public Service Company v. Carbon County Coal Company
What are the terms of the coal purchase contract?If the market price for coal declines, does NIPSCO have any plausible claims to avoid its duty to buy coal?What is the supervening event that might give rise to a plausible frustration of purpose claim?When does theforce majeureclause apply?Which side has a better argument?
Ch.5.B.3
Frustration of Purpose
5
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