Why Frustration of Contract Is One of the Most Dangerous Doctrines to Rely On

In the previous article, I explained what frustration of contract is: the automatic termination of an employment contract by operation of law when a supervening event makes performance genuinely impossible. Not difficult. Not undesirable. Impossible. 

In this article, I want to be direct about the risk. 

Frustration is one of the most scrutinised doctrines in employment law. And it is often invoked by employers precisely because it looks attractive – no fault, no dismissal process, no traditional analysis. What they discover, too often, is that it did not apply. 

The overreach problem 

Because frustration results in automatic termination without blame and without the usual safeguards of dismissal law, it can look like a shortcut. 

Courts have seen enough frustrated contract arguments to approach them with scepticism. 

Where an employer invokes frustration but performance could realistically have continued, adjustments were available, or impossibility was overstated, the termination does not disappear. It gets recharacterised. 

A court may find that what was presented as frustration was actually medical termination, handled without the evidence and process that medical termination requires. Or business termination, without the selection criteria and documentation business termination demands. Or, in some cases, disciplinary termination conducted under the wrong label. 

Frustration cannot be used to avoid harder judgments. If the real issue is incapacity, address it through medical termination. If the real issue is redundancy, address it through business termination. Misclassifying the situation creates risk on two fronts: the doctrine you relied on does not hold, and the correct framework was never applied. 

Where frustration and medical incapacity meet 

There is genuine overlap between frustration and medical incapacity, and employers sometimes misread it. 

As a general principle, where medical certification is available, medical incapacity termination is the safer route. Medical termination is designed to accommodate judgment under uncertainty, is supported by established process expectations, and tolerates a reasoned assessment of prognosis rather than requiring proof of absolute impossibility. 

Frustration applies at a higher threshold. It is appropriate where incapacity is so self-evident and permanent that medical certification adds nothing: a permanent loss of physical function essential to the role, for example, where the fact of impossibility is not in dispute. 

Where incapacity is less absolute — where there is uncertainty about prognosis, where the medical picture is contested, where a realistic if extended recovery remains possible — medical termination is the right analytical framework. Misjudging this boundary is a common source of employer exposure. 

Where frustration and business termination are different 

The contrast with business termination is equally important. 

Business termination arises from organisational choice. The employer decides to restructure. The role is eliminated. Selection is involved. Fairness of implementation is assessed. The work may still exist; the employee is simply no longer doing it. 

Frustration arises from external constraint. No one is choosing to eliminate a role. The contract has become impossible. There is no selection, because there is no alternative to assess. 

These frameworks must not be mixed. Business logic imported into a frustration argument will almost always undermine it. 

What evidence you need 

Frustration cases are frequently assessed long after the triggering event. This matters. 

Contemporaneous documentation — what was known at the time, what assessment was made, what the position was on permanence — carries significant weight. A position that shifts between the moment of frustration and the moment of challenge is a position that looks constructed rather than genuine. 

If you are going to rely on frustration, document the supervening event, the nature of impossibility, and the reason continuation was not possible. Do it at the time. Do it clearly. And do it consistently. 

The doctrine is narrow by design. It is applied sparingly. And it is tested carefully.