P was to convert alumina to aluminum. Price was determined by complex formula. Oil prices rose drastically. Thus so did Ps electricity costs
Can P get a modification of the contract price?
Doctrine of frustration only applies when frustrating event is substantial, it must be so severe that it cannot be fairly regarded as being party of the risk, which had been assumed by the parties
**Minor changes are not sufficient
A mere change in degree of difficulty or expense due to such causes as increased wages, prices of raw materials, or costs of construction, unless well beyond the normal range, does not amount to impracticability since it is the sort of risk a fixed-price contract is intended to cover
The doctrine of impractability requires the non-occurrence of the event. Focus on hardship – as well as with doctrine of frustration. Focus occurrence which greatly increases the cost, difficulty, or risk of the party’s performance
Doctrine of frustration. Focuses on a party’s severe disappointment which is causes by circumstances which frustrate his principal purpose for entering the contract. Look at whether performance of the K would be of little value to the party
The Restatement recognizes that circumstances existing at the execution of a contract may render performance impracticable or they may frustrate the purpose of one of the parties so as to execute his performance. S.265 – declares a party is discharged from performing his contract where his principal purpose is substantially frustrated by the occurrence of a supervening event. Frustration must be substantial – it is not enough that it has become less profitable or even that he will sustain a loss
s.261 of the UCC declares a party is discharged from performing a contract where a supervening event renders his performance impracticable. Performance may be impracticable bc extreme and unreasonable difficulty, expense, injury or loss to one of the parties will be involved.
What is the remedy for P?
*3 remedial rules in cases of mistake, frustration and impracticability
**No contract ever arose bc there was no true agreement between the parties
**Contract is voidable – remedy is rescission
*Where developments make performance of the contract economically senseless or purposeless, to modify the contract and to enforce it as modified would be inappropriate
P won – a remedy modifying the price term of contract was the remedy