Frustration of purpose is a term used in the law of contracts to describe a defense to an action for non-performance based on the occurance of an unforseen event which makes performance impossible or commercially impracticable. A common situation is that the subject matter of the contract – a house or a car for example – is unintentionally destroyed.

Generally, the non-performance is not excused. If the seller retained the risk of loss from damage or destruction, then the non-performance will likely be excused. However, if it is the buyer who carries the risk of loss, performance will not not excused. A seller will not be excused for nonperformance of an agreement to deliver a commodity. For example, if A agrees to sell B 100 bushels of corn, and A’s own crops are destroyed in an accident, A is still contractually obliged to sell B 100 bushels of corn because A can still obtain the corn elsewhere for the sale.

Frustration of purpose also arises as a defense where one party to the contract dies, if that party was uniquely necessary to the performance of the contract. Passage of a subsequent law that makes performance illegal will also excuse nonperformance under this doctrine.