What is frustration, and when does it discharge a contract?

• A. Frustration occurs when an unforeseen event makes performance impossible, unlawful, or radically different; the contract ends automatically.
• B. Frustration occurs only if both parties agree to terminate.
• C. Frustration allows continuation with modified terms.
• D. Frustration is a remedy that awards damages.

Answer: (A)

Frustration is a doctrine in contract law that kicks in when an unforeseen event happens after the contract is formed, making performance impossible, illegal, or so radically different from what the parties intended that nothing reasonable can be expected to go on. When that occurs, the contract is discharged automatically—neither party is in breach, and future obligations come to an end without damages or a renegotiation.

Think of scenarios like the subject matter being destroyed, a key performer becoming unavailable in a way that cannot be substituted, or a change in the law that makes the contract’s performance illegal. These are events the parties did not anticipate and could not reasonably have planned for, so continuing as before would be unfair or impractical.

The other ideas don’t fit because frustration isn’t about mutual agreement to terminate, it isn’t a damages remedy, and it doesn’t permit continuing with modified terms.