Impossibility and Frustration

Abstract

In this essay, I set out these two theories of frustration and discuss the inadequacies of each. I then show that we can overcome the inadequacies of each theory if we recognize that although impossibility of performance (situation 1) and frustration of purpose (situation 2) are frequently treated as a single excuse from liability known as “frustration,”5 they are really two distinct excuses with two distinct normative justifications. The theory of contractual agreement, suitably refined, is appropriate to the doctrine of impossibility, while the theory of contractual fairness, suitably refined, is appropriate to the doctrine of frustration. Moreover, I argue that, when properly understood, both doctrines can be reconciled with the idea that contract law holds individuals responsible for the obligations they have voluntarily assumed.

Keywords: Estoppel, Equity