frustration of purpose

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“Frustration of purpose” is a common law doctrine. Under contract law, an excuse can be used by a buyer for non-performance of contractual duties when a later and unforeseen event impedes the buyer's purpose for entering into the contract, and the seller at the time of entering the contract knew of the buyer's purpose.

For example, if the parties enter into a futures contract for grain, but a fire causes the seller to have no crop that year and is unable to perform the contract, the buyer can use the frustration of purpose to excuse performance.

[Last updated in December of 2022 by the Wex Definitions Team]