Birinder contractually promised to sell 10 000 tons of steel to Maria.Because he honestly believed that he had a total of 25 000 tons of steel in stock, he sold 15 000 tons of steel to Boris under a separate contract.After doing so, however, he discovered that he originally had only 20 000 tons of steel in stock.Because he has only 5000 tons of steel remaining, and because he had acted honestly throughout, his contract with Maria is discharged on the basis of frustration.

Question

Quizplus · Accepted Answer

The fact that Birinder acted honestly throughout and has only 5000 tons of steel remaining does not necessarily mean that his contract with Maria is discharged on the basis of frustration. Frustration occurs when a contractual obligation becomes impossible to perform due to unforeseen events. In this case, Birinder's inability to deliver 10 000 tons of steel to Maria is not due to an unforeseen event, but rather due to his own action of selling 15 000 tons of steel to Boris. Birinder may be liable for breach of contract and may have to compensate Maria for any damages resulting from his failure to deliver the steel.

Birinder Contractually Promised to Sell 10 000 Tons of Steel