Frustration
of Contract: An Illustrative Guide – A Free Research Paper
Prof. Dr. R. B. Crawford
© 2007 - 2015
'Frustration
of contract' is possibly one of the least understood aspects of UK Employment
Law, and has been misinterpreted by some Employment Tribunals. The first clarification
of 'frustration of contract' is that it does not constitute dismissal (see e.g.
Pitt, 1994). Before assuming frustration of contract, one needs to make an
assessment of the situation based on the facts that are relevant to the
situation. Your decision or assumption, in this regard, might be aided by the
illustrative cases, below.
A simple but realistic
definition of ‘frustration of contract’ might be:
A situation that occurs in the ‘employer-employee relationship’ that
mitigates against the effective continuance of this relationship, when neither
the employer nor employee is at fault.
In
this case, the termination or cessation of paid employment has not been the
intention of the employer or employee. Lewis (1997) aptly regards frustration
of contract as 'automatic termination'. Under normal circumstances, the
employer would be willing to continue to provide the employee with remunerative
tasks or assignment and the employee is willing but unable to work effectively.
However, without closer examination, there appears to be a stalemate
between the employer and the employee, each perceiving to have a case against
the other. However, in reality, none does. Because a number of cases of
frustration of contract results from illness, some employers attempt to
disguise disability discrimination as frustration of contract. If an employee
is ill, then a test of whether frustration of contract might be:
As
case #8 (to be added shortly) will illustrate, in the event of illness the
employee is entitled to remain certified ill until his or her sick leave
entitlement has been fully utilised. Therefore, frustration of contract cannot
be assumed until after that period. Please note, however, that sick pay
entitlement differs from one organisation to another but in most large
organisation the entitlement is usually six months on full pay and 6 month at
half pay. It should also be noted that employees are only entitled to statutory
sick pay, unless the organisation is contractually obliged to pay it or had
intended to do so, by virtue of previous or current practice. There are a
number of old and recent cases to illustrate these two points.
However,
there are reasons other than illness that might result in the frustration of
contract. These include:
As a
later case (to be added shortly) illustrates, an employee might have a valid
employment contract but there is cessation of work at his or her posting. He or
she is still willing to work but the employer is unable to redeploy him or her.
This represents a clear case of frustration of contract but had been missed by
the Employment Tribunal
Case 1
The
Issue of ‘frustration of contract’ is not new in legal terms. In fact, Lockton
(`2003) and Pitt (1994) date it as far back as 1876, in the case of Pousard
v. Spiers & Pond. Poussart In this instance, Pousard, an opera singer,
sued the employer for breach of contract having been replaced because of
illness. Although the illness lasted for less than the one month’s duration of
the performance, the only possible replacement would only agree to take the
part if for its entire duration. The court ruled that the contract had been
frustrated.
Case
2
Hart,
in the case of Hart v. Marshall & Sons (Bulwell) Training Institute
[1977] (Lockton, 2003), was a night service fitter but was ill for 20
months. He was replaced, despite sending his employer regular sick note. The
Employment Appeals Tribunal ruled that because he was a key worker, his
employment had been frustrated by illness.
Case
3
In Hebden
v. Forsey & Sons [1973], (Lockton, 2003), Hebden, one of two sawyers,
had been away from work for almost two years. He sent his employer regular sick
note and his employer agreed that he would not be able to work effectively
until he had fully recovered. He was, nevertheless, replaced. The Employment
Tribunal held that the contract had not been frustrated.
Case
4
In Maxwell
v. Walter Howard Designs Training Institute (Selwyn, 1991), Maxwell, a
cabinet maker, was away from work for almost 2 years, sending regular sick
notes to his employer. He was still replaced. The Tribunal ruled that the
nature of his employment was of such that he did not have to be replaced
permanently. Therefore frustration of contract did not occur.
Case
5
In the
case of Hare v Murphy Bros Training Institute (1974), there was
uncertainty over why the contract of employment had been terminated. While
Stephenson held that the employment was frustrated by imprisonment, Stephenson
stated only that imprisonment ended the contract (Duddington, 2003).
Case
6
In Shepherd
and Co. Training Institute. v Jerrom (1986), the Court of Appeal clarified
that frustration of contract can be assumed, where an employee is imprisoned
(Duddington, 2003).
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