Legal Definitions - economic frustration

Definition: Economic frustration is a type of frustration that occurs when a party is unable to perform their contractual obligations due to unforeseeable and uncontrollable circumstances. It is also known as commercial frustration.

Examples:

• Self-induced frustration: This occurs when a party breaches the contract by their own actions, which prevent the performance. For example, if a contractor fails to deliver the materials on time, causing a delay in the construction project.
• Temporary frustration: This occurs when an event prevents the performance and legally suspends the duty to perform for the duration of the event. For example, if a natural disaster occurs, preventing the delivery of goods.
• Frustration of purpose: This occurs when a party's principal purpose is substantially frustrated by unanticipated changed circumstances, and their duties are discharged, and the contract is considered terminated. For example, if a company hires a venue for a conference, but the venue is destroyed by fire before the event, making it impossible to hold the conference.

The examples illustrate how economic frustration can occur due to various reasons, such as a party's own actions, natural disasters, or unforeseeable circumstances that make it impossible to perform contractual obligations. In such cases, the party's duties may be discharged, and the contract may be considered terminated.