3. On April 1, 2017, Construction Inc. agreed to construct a shopping center for Smith for $6,000,000. Once construction commenced, Construction Inc. ran into several difficulties including a strike in the building trades, very wet weather conditions and a shortage of steel girders. All of these problems greatly increased the costs for Construction Inc.

1. Has the contract between Construction Inc. and Smith been frustrated? In your answer, explain what frustration is.
2. Assume that the contract between Construction Inc. and Smith is not frustrated and Construction Inc. is forced to absorb the additional costs. How should Construction Inc. through the use of clauses in its contract, have managed these risks in advance?

c. Assume Smith promises to compensate Construction $500,000 for its additional costs. Is the promise enforceable? Explain.