A and B enter into a contract whereby A agrees to supply B with 10 000 tins of tuna at the rate of 1000 tins per month from his tuna factory in Bayport,Nova Scotia,and B agrees to pay A $2 per tin.A supplies 1000 tins of tuna,but before he can collect,his factory is destroyed by fire.If the contract is discharged by frustration,which of the following statements is correct?
A)A must obtain the tuna from another source to satisfy the contract.
B)B will have to pay A the sum of $2000 because there was no deposit.
C)Only future obligations are discharged,and B must pay A the sum of $2000.
D)All obligations under the contract are discharged,A and B's obligations are both discharged,and B does not have to pay A the sum of $2000.
E)B will not have to pay A the sum of $2000 because there is no longer a contract.

Question

Quizplus · Accepted Answer

Frustration occurs when an unforeseen event occurs which makes the performance of a contract impossible. In this case, A's factory being destroyed by fire was an unforeseen event, and thus frustrates the contract. However, since A has already performed his obligation by supplying 1000 tins of tuna, only future obligations of the contract are discharged. Therefore, B is still obligated to pay A for the 9000 tins of tuna that were not supplied at a rate of $2 per tin, which amounts to $18,000 in total.

A and B Enter into a Contract Whereby a Agrees