A legal concept involving the nullifying
or thwarting of one’s efforts. A primary
consideration in law is that contracts in
general should be binding on the parties
involved. However, something may occur after
the agreement is made that is unforeseen and
beyond the control of either party which
makes it impossible to perform the contract,
e.g., the structure is destroyed by fire or
the property is expropriated. The law
recognizes that, in such cases, the contract
is discharged by frustration. In other
words, the contract is incapable of
performance because circumstances have
changed so drastically that the thing that
was contracted for is different from what
would now occur if the contract was to be
performed.
Frustration can be encountered in a real
estate transaction. A decision that a
contract has been discharged by frustration
is a practical and reasonable solution to a
situation that was unforeseen and beyond the
power of the parties to prevent. In such
cases, both parties are released from their
duty of further performance and returned to
the situation they were in prior to the
agreement, and the deposit (if applicable)
returned to the buyer. Many
agreements/contracts address the unforeseen
situation of the subject matter being
destroyed. The buyer has the option to avoid
the contract or have the property returned
to its original condition.
The doctrine of frustration is somewhat
complex and it should not be assumed that a
contract can be cancelled without close
examination of the relevant facts. A lawyer
should always be consulted before attempting
to avoid a contract on this basis.
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