A Theory of Frustration and Its Effect

Abstract

One of the key legal questions that COVID-19 has raised relates to the status of the traditional contractual doctrine of frustration. The pandemic and the ongoing lockdowns across the globe have made it difficult for many contracts to perform. At the same time, there is a deep doctrinal and conceptual confusion with respect to the very essentials of this doctrine and its remedy - i.e., what happens after an adjudicative tribunal declares that a given contract has been frustrated. The paper offers a unified conceptual account of the frustration doctrine and claims that both the doctrine and its remedy crystallize a single unifying idea.

Keywords: Frustration; Covid-19; Unforeseen event; Reasonable foreseeability; Frustration remedy; Unjust enrichment

JEL Classification: K12; K41