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Frustration of Purpose

Frustration of Purpose

Definition

A defense to a breach-of-contract claim, which provides that a party’s performance is excused if circumstances since the contract have changed, such that the principal purpose of the contract is substantially frustrated (i.e., if the other party's performance has become virtually worthless). The event that caused the frustration of purpose must not fall within the possible risks each party assumed by entering into the contract, non-occurrence of the event must be a basic assumption under which the contract was made, and the event's occurrence must not be the breaching party's fault.

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