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May 6, 2021

Temporary or Partial Impracticability and Frustration of Purpose and Pandemic Affected Contracts and Leases

The Restatement 2d of Contracts, adopted in 1981, added concepts of temporary and partial impracticability and also restitution or reliance damages to ameliorate loss.  While traditional application of such doctrines would lead to a finding that the contract automatically terminates, other cases state that if the frustration or impracticability is only temporary, then so is the hold on obligations (i.e. paying rent on office space when local ordinance forbids non-essential office use).  This will obviously be only temporary.

Thus, the Restatement 2d Contracts Section 269 operates to temporarily suspend a party’s obligation to perform during the period of impracticality or frustration, but typically does not discharge the obligation altogether. In other words, when the circumstances giving rise to the impracticality or frustration cease to exist, then the parties will be required to perform.

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