1. George Mason School of Law
Contracts II
M. Frustration
F.H. Buckley

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

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

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

5. Frustration vs. Impracticability
Is there a difference in scope?

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

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

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

9. 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

10. 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

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

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

13. Frustration: Krell v. Henry 760

14. Frustration: Krell v. Henry
56 Pall Mall

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

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

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

18. 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?

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

20. 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?

21. 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.

22. 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…

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

24. 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?

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

26. 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?

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

28. Lloyd v. Murphy
Wilshire Bvld.
at Almont, 1940

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

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

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

32. 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…”

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

34. 1941 Cadillac Fleetwood

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

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

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

38. 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?

39. 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

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

41. Common Purpose Requirement
Krug International at 771

42. Common Purpose Requirement
An information-forcing rule?

43. Change in Government Regulations
Restatement § 264
Goshie at 768