Frustration of purpose

Contract may be voided when there is a frustration of its purpose.

Frustration of Purpose

“To invoke frustration of purpose as a defense for nonperformance, the frustrated purpose must be so completely the basis of the contract that, as both parties understood, without it, the transaction would have made little sense.” PPF Safeguard, LLC v. BCR Safeguard Holding, LLC, 85 AD3d 506, 508 [1st Dept 2011] (quotation marks omitted); Crown IT Servs., Inc. v. Koval–Olsen, 11 AD3d 263, 265 [1st Dept 2004]; see also Rockland Dev. Assocs. v. Richlou Auto Body, Inc., 173 A.D.2d 690, 691 [2d Dept 1991] (the doctrine of frustration of purpose applies when the frustration is substantial). “The doctrine applies when a change in circumstances makes one party’s performance virtually worthless to the other, frustrating his purpose in making the contract.” PPF Safeguard, 85 AD3d at 508 (emphasis added), quoting Restatement (Second) of Contracts Section 265, Comment a. Gelita, LLC v. 133 Second Ave., LLC, 42 Misc 3d 1216(A) [N.Y. Sup Ct 2014].

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