Casual Legal: The Frustrating Doctrine of Frustration
DISCLAIMER: This article is meant to provide information to Alberta Municipalities members only and is not intended to provide legal advice. You should seek the advice of legal counsel to address your specific set of circumstances. Although every effort has been made to provide current and accurate information, changes to the law may cause the information in this article to be outdated. This content is not intended for the general public.
By Maddison Croden
Reynolds Mirth Richards Farmer LLP
Alberta Municipalities Casual Legal Service Provider
From time to time, during the course of a contract, an unexpected situation arises for which the parties made no provision in the contract, and which renders performance of the contract impossible, impracticable, or something radically different than what the parties intended. When this occurs, the doctrine of frustration may apply to have the effect of relieving both parties to the contract of their obligations to perform. The principle of frustration often arises in the employment context where an employee has suffered from an unanticipated illness or injury which impacts the ability of the employee to perform their obligations under their employment agreement. In those circumstances, employers often wonder whether the contract of employment may simply end without the obligations which would otherwise accompany a termination of employment without cause.
An employment contract may be said to be frustrated where there is no reasonable likelihood of the employee being able to return to work within a reasonable time. A permanent disability on the part of an employee which prevents them from fulfilling the functions required by their employment presents a compelling circumstance for an employer to allege frustration of contract. An illness that is routine or short in duration is unlikely to suffice. Whether a particular illness or injury will amount to frustration of contract depends on the circumstances of the employee including the history of the employment relationship, the nature of the illness or injury, the nature of the employment, the expected duration of absence from work, the terms of the employment contract, and the duration of the employment agreement.
For example, the presence of long-term sick leave and disability benefits can indicate a greater tolerance for the duration of an employee’s absence before frustration can be said to occur, because it may be inferred that the contracting parties anticipated an employee might take leave for illness. Depending on the factors identified above, significant periods of absence may not amount to frustration of contract. In one instance, the Court weighed these factors and determined that a two-year illness did not frustrate the contract of employment of an employee of 30 years.
It is a high bar to establish frustration of contract, and Courts are likely to do so only in exceptional circumstances. It is important to consult with a legal professional to assess whether the particular circumstances of an employee rise to the level of frustration of contract. It is also important to remember that, even where an employer suspects that an employment agreement has been frustrated, the employer has an obligation to comply with the Alberta Human Rights Act and consider whether there are accommodations that can be made to facilitate the employee’s return to work.
To access Alberta Municipalities Casual Legal Helpline, Alberta Municipalities members can call toll-free to 1-800-661-7673 or casuallegal [at] abmunis.ca (email )to reach the municipal legal experts at Reynolds Mirth Richards and Farmer LLP. For more information on the Casual Legal Service, please call 310-MUNI (6864) or riskcontrol [at] abmunis.ca (email) to connect with Alberta Municipalities Risk Management staff. Any Regular or Associate member of Alberta Municipalities can access the Casual Legal Service.
