FRUSTRATED LEASES: NO TO NEVER - BUT RARELY IF EVER

Abstract

This article surveys the historical debate surrounding the application of the doctrine of frustration to leases. The author outlines a framework for determining when a contract may be discharged by frustration, beginning with a general test and showing how it is affected by temporary and intentional frustration. He then considers the effect of two risk allocation theories: Posner and Rosenfield’s economic analysis of contract law and Reiter’s implicit allocation theory. On the basis that cost sharing may not achieve distributive justice, he concludes that the lessor should assume the risk unless evidence of implicit risk allocation to the contrary is adduced.