What is “frustration of contract”?

It is possible that at some point there will be talk of “the doctrine of frustration” and “frustration of contract”. The doctrine of frustration is very complicated and it is not possible (or desirable) to define it here. The starting point is that when parties enter into a contract they are making a legally enforceable promise to perform. Only in exceptional or extraordinary circumstances will they be excused from performing their obligations.

Mere hardship or inconvenience is not enough to trigger frustration. The thing that has frustrated the contract must be unexpected or unforeseen. The fact that an earthquake has occurred and has damaged a workplace does not automatically give rise to frustration of contract. If the question does arise then it will be necessary to assess each case on its individual merits.

Frustration of contract is absolute in that there is no such thing as “partial frustration”. Either a contract is frustrated or the parties are expected to perform their obligation in full. There is also a possible view that in New Zealand earthquakes are not unforeseen (or at least unforeseeable) therefore the doctrine of frustration will not apply, especially given the ability to provide for such events in an employment agreement (i.e. force majeure clauses). frustrated or the parties are expected to perform their obligation in full.