Frustration of Purpose: A Frustrating Doctrine

By: Erica Stutman

Next Gen Capital, LLC v. Consumer Lending Associates, LLC illustrates the difficulty a tenant faces when trying to avoid liability for breaching a lease based on the “frustration of purpose” defense. No. 1 CA-CV 12-0624 (Ariz. Ct. App. Dec. 19, 2013).  In 2007, Consumer Lending Associates (“CLA”) signed a five-year lease, which limited CLA’s primary use of the premises to operating its “payday loan” business.  CLA was operating pursuant to an Arizona statute, which, by its terms, expired on July 1, 2010.  When the authorizing statute expired, CLA vacated the premises and refused to pay rent due through the end of the term, claiming that the lease terminated “by operation of Arizona law.”  The landlord sued for breach of contract, and the superior court granted a motion for summary judgment, holding that CLA had to pay unpaid rent and relates charges through the end of the lease term. … Read More »

Author: Erica Stutman | Leave a comment Tagged , ,

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