Frustration of Contract
Key points § At common law, a contract of employment is said to have been frustrated when one of the parties, usually the employee, is unable to comply with his contractual obligations – either through death, a prolonged or permanent illness or disability, or a sentence of imprisonment. The winding-up of a company, the appointment of a receiver, or the dissolution of a partnership will result in most, but not all, cases in the automatic termination of the contracts of employment of the relevant employees. In theory at least, the employer is under no obligation to terminate the contract formally or give notice to such an employee that he is no longer employed. In practice, the prudent employer will be a little more cautious before treating a contract of employment as no longer subsisting. § In the case of a prolonged illness, a contract cannot be frustrated so long as the employee has not exhausted his (or her) right to paid sick leave under the terms of that contract. Once...