When two or more parties enter into a contract, they expect that both parties will fulfill their obligations as per the agreement. However, there are times when one of the parties breaches the terms of the contract, leading to frustration of contract.
Frustration of contract is a legal concept that refers to a situation where it becomes impossible or impractical to perform the terms of the contract due to unforeseen events that are beyond the control of the parties involved.
In simpler terms, frustration of contract occurs when a contract becomes impossible to perform due to circumstances that were not anticipated at the time of the agreement.
Examples of frustration of contract can include situations where the subject matter of the contract is destroyed or lost due to fire or theft, a change in the law that makes it unlawful to perform the contract, or a change in the circumstances that make it physically impossible to perform the terms of the contract.
There are certain legal implications that arise when a contract is frustrated. The first implication is that the parties are no longer required to fulfill their obligations as per the original terms of the contract. The second implication is that the parties are released from any further liability or responsibility under the contract.
It is important to note that frustration of contract is not the same as a breach of contract. In a breach of contract situation, one of the parties fails to fulfill their obligations as per the agreement, while frustration of contract occurs due to unforeseen events that were beyond the control of either party.
When a contract is frustrated, the parties involved should communicate with each other to try and find a way forward. If a resolution cannot be reached, legal action may be necessary to determine the rights and obligations of each party.
In conclusion, frustration of contract occurs when a contract becomes impossible or impractical to perform due to unforeseen events beyond the control of the parties involved. It is important for parties to communicate and try and find a way forward in such situations, or if necessary, seek legal advice and action.