A more thorough explanation:

Commercial frustration is a legal term used to describe a situation where a contract becomes impossible or impractical to perform due to unforeseeable events that occur after the contract is made. It is also known as frustration of purpose or impracticability.

Unlike impossibility, which applies when performance is actually impossible, commercial frustration applies when intervening circumstances make the contract useless or financially absurd to perform for one party.

For commercial frustration to apply, the event must essentially destroy all value or purpose of the contract for one party. An event that only causes major loss to one party would not suffice. Additionally, the party claiming commercial frustration could not be the cause of or have any warning of the event.

For example, if a company contracts with a supplier to provide a specific type of raw material for a product, but a natural disaster destroys the supplier's factory and makes it impossible to provide the material, the company may be able to claim commercial frustration and be released from the contract.

However, if a car lot owner signs a lease for a lot during World War II, when the public feared government restrictions on car sales, and the restrictions are actually implemented, the court may not find commercial frustration applies because the event was foreseeable, even though it was extraordinary. This was the case in Lloyd v. Murphy.