What is a Frustrated Contract?
Under United States contract law, a frustrated contract is one that—through no fault of either party—cannot reasonably be performed because of unforeseeable circumstances. In Florida, frustration of purpose may be a valid defense against a breach of contract lawsuit. In this article, our Miami commercial litigation attorneys explain some of the key things that individuals and business owners should know about frustrated contracts.
Frustrated Contacts: An Unforeseeable Circumstance Prevents Performance
A frustrated contract is one that cannot reasonably be performed because of outside, unforeseeable circumstances. In order to be considered a frustrated contract under Florida law, something must have happened that renders performance of the agreement:
- Literally unachievable;
- Practically impossible; or
- Against the law.
In the real world, frustration can occur in a wide range of different circumstances. As an example, imagine that a commercial tenant entered into a lease agreement with a commercial landlord. Under the terms of the agreement, the tenant is planning to take over a specific unit exactly four months in the future. However, through no fault of the landlord, the building, and the unit, are destroyed in a fire before the lease begins. Most likely, a Florida court would excuse both parties of performance under this lease agreement on the grounds that the contract was frustrated. Performance is impossible—and the landlord is likely not to blame for any damages sustained by the tenant.
Frustration is a Valid Excuse of Performance—But Circumstances Must Be Unforseeable
Frustration of purpose is a defense in a breach of contract claim. Simply put, if frustration of the contract occurred, the parties are excused from the agreement. Though, it is important to understand that this is a relatively narrow defense. Frustration does not mean hardship.
In Florida, individuals and businesses cannot get out of an agreement simply because performing would cause them financial hardship or because their circumstances have changed and the deal is now a “bad” one. Instead, performance must be literally or practically unachievable.
Further, frustration only applies to unforeseeable circumstances. Risks are inherent in every contract. If a risk was reasonably foreseeable, then the parties will likely bear that risk—frustration may not be applicable. As always with contract cases, the specific language of the agreement matters. Courts work to uphold the agreed intention of the parties. Whether or not a specific circumstance will be deemed ‘unforeseeable’—and thus will be permitted as the basis of a frustration of purpose excuse—depends entirely on the precise language of the contract.
If you or your company is currently involved in a dispute over a ‘frustrated’ contract, it is imperative that you seek guidance from an experienced attorney as soon as possible. A lawyer will protect your rights.
Contact Our Florida Commercial Litigation Attorneys Today
At Pike & Lustig, LLP, our Florida business lawyers have deep experience handling the complete range of contract law cases, including frustrated contract disputes. To schedule your confidential business law consultation, please call us now. With law offices in Miami and West Palm Beach, we represent clients in contract disputes throughout South Florida.