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CONTRACTS Chapter 5. Defining Performance Obligations: Conditions and Excuses

CONTRACTS Chapter 5. Defining Performance Obligations: Conditions and Excuses. KRELL v. HENRY. Krell v. Henry. What is the contract’s subject? Is it impossible for Henry to perform? What does the court decide? Was the risk of the cancellation of the coronation foreseeable?

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CONTRACTS Chapter 5. Defining Performance Obligations: Conditions and Excuses

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  1. CONTRACTSChapter 5. Defining Performance Obligations: Conditions and Excuses Frustration of Purpose

  2. KRELL v. HENRY

  3. Krell v. Henry • What is the contract’s subject? • Is it impossible for Henry to perform? • What does the court decide? • Was the risk of the cancellation of the coronation foreseeable? • Why not argue impracticability? • Can Krell be distinguished from Sub-Zero Freezer Co.? Frustration of Purpose

  4. Doctrine of Frustration of Purpose • A party’s duty is discharged if • Principal purpose is substantially frustrated by occurrence of event after K is made • Non-occurrence of event was a basic assumption on which K was made • Neither party is at fault • Unless the language or the circumstances indicate the contrary. Rest. (2d) 265 • Compare to Doctrine of Impracticability (*underlined language) Impossibility & Frustration of Purpose

  5. Northern Indiana Public Service Company v. Carbon County Coal Company • What are the terms of the coal purchase contract? • If the market price for coal declines, does NIPSCO have any plausible claims to avoid its duty to buy coal? • What is the supervening event that might give rise to a plausible frustration of purpose claim? • When does the force majeure clause apply? • Which side has a better argument? Frustration of Purpose

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