The Most Important Statute In B.C. Right Now (That You've Never Heard Of)

In 1974, B.C. passed what is now the Frustrated Contract Act (FCA), to resolve uncertainty left when a contract was deemed frustrated (where performance has become impossible or radically different due to supervening events). Since then, the FCA has received little judicial consideration. It has been called “badly drafted and haphazard”. Most practitioners are unaware, or vaguely aware, that it even exists. Many commercial contracts do not account for it at all.

Enter COVID-19. Suddenly, many businesses are re-considering their contracts for force majeure clauses and, in the absence of those clauses, assessing whether they could rely on the doctrine of frustration of contract. In the current climate, the FCA could have a dramatic effect on your legal position. The following is a brief primer.

Does the FCA apply?

The FCA applies automatically wherever a contract is deemed frustrated and where the contract does not provide for the consequences of frustration. So, unless your contract deals expressly with the rights of the parties on frustration of the contract, the FCA likely applies.

What are the effects of the FCA?

The FCA is aimed at establishing the rights of parties where a contract is partially performed when it becomes frustrated. It...