In what scenario does frustration of purpose apply to a contract?

Frustration of purpose applies to a contract when an unforeseen event fundamentally undermines a core purpose of the contract, making it impossible for the parties to achieve their intended objective. This legal doctrine allows for the discharge of contractual obligations when circumstances arise that were not anticipated by the parties at the time of the agreement.

To illustrate, if two parties enter into a contract for the lease of an event space specifically for a particular occasion (like a wedding), and that event gets canceled due to an unexpected disaster (like a natural calamity), the core purpose of the contract—the celebration—cannot be fulfilled. As a result, the frustrated purpose provides grounds for relief from the contract.

In contrast, other options focus on issues such as inability to agree on terms, disputes regarding performance timelines, or a party failing to fulfill obligations. While these may lead to contract disputes, they do not represent cases where the fundamental purpose of the contract has been frustrated due to external circumstances beyond the control of the parties. Therefore, they do not fit the definition of frustration of purpose.