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George Mason School of Law. Contracts II Frustration F.H. Buckley [email protected]. Lost volume seller?. Frustration vs. Impracticability. Frustration is the older doctrine, impracticability the newer one How to tell them apart—or does it matter?. Frustration vs. Impracticability. - PowerPoint PPT PresentationTRANSCRIPT
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Lost volume seller?
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Frustration vs. Impracticability
Frustration is the older doctrine, impracticability the newer one
How to tell them apart—or does it matter?
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Frustration vs. Impracticability
Both might be invoked for events before or after formation
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Frustration: Before or After
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Restatement 266(2): Where, at the time a contract is made, a party’s principal purpose is substantially frustrated
Restatement 265: “Where, after a contract is made, a party’s principal purpose is substantially frustrated
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Impracticability: Before or After
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Restatement 266(1): Where, at the time a contract is made, a party’s performance under it is impracticable
Restatement 261: “Where, after a contract is made, a party’s performance is made impracticable
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The Restatement understanding
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Time
Formation of Contract
MistakeImpracticabilityFrustration
ImpracticabilityFrustration
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Frustration vs. Impracticability
Is there a difference in scope?
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Examples of Impracticability
Death or Incapacity of a person: 262
Res extincta etc.: 263
Govt reg: 264
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Examples of Frustration
Restatement § 265 Illustration 3: Res extincta: Hotel
destroyed Illustration 4: Govt reg
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Impracticability: An economic focus
Teitelbam: “focus on greatly increased costs”
Traynor: expected value of performance is destroyed
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Frustration:A psychological focus?
Teitelbaum: “focuses on a party’s severe disappointment caused by circumstances that frustrate his purpose in entering into the contract”
Traynor: performance is vitally different from what was expected
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Impracticability vs. FrustrationWho are the parties?
Frustration: focus is on consumer of goods or services
Impracticabilty: focus is on provider of goods or services, where performance is impossible or vastly more expenses
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Impracticability vs. FrustrationWho are the parties?
Frustration focuses on consumers? Taylor v. Caldwell Krell v. Henry
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Impracticability vs. FrustrationWho are the parties?
Impracticabilty focuses on providers? Howell v. Coupland Aluminum v. Essex
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Frustration: Krell v. Henry 760
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Frustration: Krell v. Henry
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56 Pall Mall
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Frustration: Krell v. Henry
What was the amount of the license?
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Frustration: Krell v. Henry
What was the amount of the license? About $400 for two days.
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Frustration: Krell v. Henry
Was performance of the license impossible, in the sense of Taylor v. Caldwell?
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Frustration: Krell v. Henry
Was performance of the license impossible, in the sense of Taylor v. Caldwell? Was the purpose to take the room for
two days, or to take the room to see the Coronation procession?
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Frustration: Krell v. Henry
Suppose the agreement had been for a one-month lease and not a two day license?
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Frustration: Krell v. Henry
Suppose the agreement had been for a one-month lease and not a two day license? Is Paradine still good law?
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Frustration: Krell v. Henry
Why do you think the spectator did not seek the return of his deposit?
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Frustration: Krell v. Henry
Why do you think the spectator did not seek the return of his deposit? Is Stubbs v. Holywell on point?
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Frustration: Krell v. Henry
I am a promoter and hire a hall for a musical show. On the date of the show a prominent politician dies and I cancel the show. Do I have to pay for the hall?
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Frustration: Krell v. Henry
I hire a limo to take me to Baltimore, telling the driver I want to see the Orioles’ opening day. That morning I learn that the game is rained out. I cancel the limo.
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Frustration: Krell v. Henry
I purchase tickets from a ticket-seller for a New York play, now in try-outs in New Haven. Subsequently, it is conceded, the play is discovered to be a bomb…
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Frustration: Krell v. Henry
A builder undertakes to build a house but discovers that the land is unsuitable for a building. Stees and “Work before pay”
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Frustration: Krell v. Henry
A builder undertakes to build a house but discovers that the land is unsuitable for a building. Cf. Restatement 263, illus. 4
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Frustration: Krell v. Henry
Who should bear the risk of the King’s illness?
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Frustration: Krell v. Henry
Who should bear the risk? Who was in the best position to predict
that the King would come down with appendicitis?
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Frustration: Krell v. Henry
Who should bear the risk? What’s wrong with applying Paradine and
assigning the risk to the spectator?
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Frustration: Krell v. Henry
Who should bear the risk? What’s wrong with applying Paradine and
assigning the risk to the spectator? Why might the spectator argue that this
would amount to a windfall for the owner?
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Lloyd v. Murphy 763
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Wilshire Bvld. at Santa Monica, 1940
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Lloyd v. Murphy 785
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Wilshire Bvld. at Almont, 1940
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Lloyd v. Murphy 785
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American Academy of Motion Pictures, Wilshire and Almont, Beverly Hills CA
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Lloyd v. Murphy
Does it matter that this was a lease?
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Lloyd v. Murphy
Does it matter that this was a lease? Williston at 765 “No case…” p.767
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Lloyd v. Murphy
“The consequences of applying the doctrine of frustration to a leasehold involving less than a total or nearly total destruction of the value… would be undesirable”
“Litigation would be encouraged…”
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Lloyd v. Murphy
Was the restriction to new car sales a nearly total destruction of the purpose?
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Lloyd v. Murphy
Was the restriction to new car sales nearly total destruction of the purpose? Given the waiver… “It was just the location…”
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Lloyd v. Murphy
Who is in the best position to assume the risk?
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Lloyd v. Murphy
Should the defendants on August 4, 1941 have anticipated Pearl Harbor?
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Lloyd v. Murphy
Should the defendants on August 4, 1941 have anticipated Pearl Harbor? “It cannot be said the risk of war was so
remote a contingency” Surprise attack? What surprise?
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Lloyd v. Murphy
Should the defendants on August 4, 1941 have anticipated Pearl Harbor? “It cannot be said the risk of war was so
remote a contingency“ 1940 National Defense Act and Detroit’s
response
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Common Purpose Requirement
Edwards p. 771 Why might this make sense?
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Common Purpose Requirement
Krug International at 771
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Common Purpose Requirement
Is this consistent with Mayer at 768 Does it matter if the seller knew of the
plaintiff’s tax plans?
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Change in Government Regulations
Restatement § 264
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Change in Government Regulations: Atlas 724
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Atlas Corp. uranium “tailings” pile
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Changes in Government Regulations
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Consumers Power 768
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Changes in Government Regulations
Goshie Farms p. 768
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Substantiality Requirement
Cf. Restatement 152 on mistake “material effect on the agreed exchanges
”
Should this be implied in frustration cases? Haas p. 770
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