George Mason School of Law Contracts II M. Frustration F.H. Buckley fbuckley@gmu.edu

Frustration pre-Restatement Formation of Contract Frustration Condition Subsequent Mistake, Condition Precedent Time

The Restatement understanding Formation of Contract Impracticability Frustration Mistake Impracticability Frustration Time

Frustration vs. Impracticability Frustration is the older doctrine, impracticability the newer one How to tell them apart—or does it matter?

Frustration vs. Impracticability Is there a difference in scope?

Examples of Impracticability Death or Incapacity of a person: 262 Res extincta etc.: 263 Govt reg: 264

Examples of Frustration Restatement § 265 Illustration 3: Res extincta: Hotel destroyed Illustration 4: Govt reg

Impracticability: An economic focus Teitelbam in Alcoa: “focus on greatly increased costs” Traynor in Lloyd v Murphy: expected value of performance is destroyed

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: extreme hardship, value of performance destroyed

Impracticability vs. Frustration Who 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

Impracticability vs. Frustration Who are the parties? Frustration focuses on consumers? Taylor v. Caldwell (Surrey Gardens) Krell v. Henry

Impracticability vs. Frustration Who are the parties? Impracticabilty focuses on providers? Howell v. Coupland Aluminum v. Essex

Frustration: Krell v. Henry 760

Frustration: Krell v. Henry 56 Pall Mall

Frustration: Krell v. Henry What was the amount of the license?

Frustration: Krell v. Henry What was the amount of the license? About $400 for two days.

Frustration: Krell v. Henry Was performance of the license impossible, in the sense of Taylor v. Caldwell?

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?

Frustration: Krell v. Henry Suppose the agreement had been for a one-month lease and not a two day license?

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. The nation is in mourning and I cancel the show. Do I have to pay for the hall?

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.

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…

Frustration: Krell v. Henry Who should bear the risk of the King’s illness?

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?

Frustration: Krell v. Henry Who should bear the risk? What’s wrong with applying Paradine and assigning the risk to the spectator?

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?

Lloyd v. Murphy 763 Wilshire Bvld. at Santa Monica, 1940

Lloyd v. Murphy Wilshire Bvld. at Almont, 1940

Lloyd v. Murphy American Academy of Motion Pictures, Wilshire and Almont, Beverly Hills CA

Lloyd v. Murphy Does it matter that this was a lease?

Lloyd v. Murphy Does it matter that this was a lease? Williston at 765 “No case…” p.767

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…”

Lloyd v. Murphy Was the restriction to new car sales a nearly total destruction of the purpose?

1941 Cadillac Fleetwood

Lloyd v. Murphy Was the restriction to new car sales nearly total destruction of the purpose? Given the waiver… “It was just the location…”

Lloyd v. Murphy Who is in the best position to assume the risk?

Lloyd v. Murphy Should the defendants on August 4, 1941 have anticipated Pearl Harbor?

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?

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

Common Purpose Requirement Edwards p. 771 Why might this make sense?

Common Purpose Requirement Krug International at 771

Common Purpose Requirement An information-forcing rule?

Change in Government Regulations Restatement § 264 Goshie at 768