What might be an "analog" for "frustration of purpose?"

Question

In a contract, frustration of purpose occurs when "unforeseen" events prevent the operation of a contract from achieving its intended results, even if it can technically be fulfilled. For instance, someone hired a caterer for an event, and COVID-19 prevented the event from taking place on the target date. I would guess in this case that the client (who hired the caterer) would be able to cancel the contract because people couldn't attend the event, even if the caterer delivered the goods.

Suppose, instead, the contract was derailed as a result of the actions of one of the parties. E.g. the hiring party tore down the building where the event was supposed to take place in order to build a new one, so there were no "facilities" for it. Is there a name for this analogy to "frustration of purpose" when it was due to the actions of one party rather than "act of God"? Would the rights of the caterer to do the work and get paid differ from the first case?

Answer 1

I think that you are referring to the prevention doctrine also known as the performance doctrine of the common law of contracts.

Prevention doctrine is a common-law principle of contract law which says that a contracting party has an implied duty not to do anything that prevents the other party from performing its obligation. A party who prevents performance of a contract may not complain of such nonperformance.

The Restatement (Second) of Contracts § 245 ("Effect of a Breach by Non-Performance As Excusing the Non-Occurrence Of a Condition") explains the doctrine as follows:

Where a party's breach by non-performance contributes materially to the non-occurrence of a condition of one of his duties, the non-occurrence is excused.

See, e.g., Meson v. GATX Tech. Servs. Corp.( 507 F.3d 803, 806 (4th Cir. Md. 2007), Barnhill v. Veneman (In re Peanut Crop Ins. Litig.), 524 F.3d 458 (4th Cir. 2008); General Datacomm Indus. v. Arcara (In re General Datacomm Indus.), 407 F.3d 616, 626 (3d Cir. Del. 2005); Cox v. SNAP, Inc., 859 F.3d 304, 308 (4th Cir. 2017) (quoting Moore Bros. Co. v. Brown & Root, Inc., 207 F.3d 7171, 725 (4th Cir. 2000)); Haddon Hous Assocs v. United States, 711 F.3d 1330, 1338 (Fed. Cir. 2013); Williston, § 39:4.

The prevention doctrine involves concepts similar to the duty of good faith and fair dealing, but is a more specific application of the concept. The duty of good faith and fair dealing can also involve many other fact patterns that are outside the prevention doctrine.

Usually, the frustration of purpose defense involves actions or events not caused by a party to the contract.

The tort of tortious interference with contract generally involves a non-party's action intended to interfere with the ability of one party to fulfill contractual obligations to another party, while the prevention doctrine applies to a party's interference with the ability of a counter-party to the contract to perform the contract.

Answer 2

Is there a name for this analogy to "frustration of purpose" when it was due to the actions of one party rather than "act of God"?

Breach of contract. The party who tore down the building knew beforehand his commitment pursuant to the contract.

Frustration of purpose is from the standpoint of the party without fault. See Restatement (Second) of Contracts at § 265 and 266(2). The Restatement makes no distinction on the source of that frustration (i.e., the counterparty or something also beyond the counterparty's control).

Would the rights of the caterer to do the work and get paid differ from the first case?

That depends on the terms of the contract entered by the caterer and his client. See also Restatement at § 377.

Answer 3

"Frustation of purpose" caused by a party to the contract is still a frustration of purpose.

I don't know of a name for that specific type of act, but it falls into the broader category of a breach of the duty of good faith. Every party to a contract has a duty to act in good faith to fulfill the purposes of the contract.

So imagine that a bride hires a caterer for her wedding, with a contract saying only, "I agree to pay you $1,000 to cater my wedding with my favorite foods." The bride and the caterer have a duty to act in good faith to ensure that each side gets what it is entitled to under the contract. The duty of good faith requires the bride to tell the caterer what her favorite foods actually are, though it would not require her to report to the kitchen if the caterer's bakers went on strike.

So to use your example, a government order preventing the event from going forward would be a classic example of frustration excusing the parties from performing or being held liable for breach, assuming the event was planned before the order was reasonably foreseeable.

But if the caterer tore down the building or killed the groom to prevent the wedding from going forward, he would be in breach of his duty of good faith. This is not the same as a breach of contract; breach of contract would require the caterer to pay contract damages amounting to the cost of hiring someone else to perform, but the bride is not going to hire someone else to cater a wedding that isn't going to happen. Instead, the bride is excused from performing her obligations, i.e., she does not have to pay the caterer $1,000.

There is a separate tort for interference with contractual relationships, but as far as I know, it's limited to cases where a third party interferes with a party's performance. So the bride could not sue the caterer for interference with her catering contract, but the officiant or the DJ could probably sue the caterer for interference with their contracts with the bride.