frustration of purpose

a situation that may discharge a contractual obligation. A frustration of purpose arises when the fundamental reason for the contract no longer exists. In general, a frustration of purpose occurs only in extreme situations that were not intentionally brought about by any of the contracting parties.

Intending to build a small beach home, Fergus buys a piece of property overlooking the Pacific Ocean and hires a contractor. Unfortunately, geological tests find the ground to be too unstable to support the structure. The planning commission subsequently denies Fergus' application for a building permit. Fergus then seeks to discharge his contractual obligation with the builder, claiming frustration of purpose.