Contracts are an essential part of our daily lives, governing various aspects of our personal and professional relationships. However, situations may arise where the performance of a contract becomes impossible, leading to a discharge of the agreement. In this article, we will explore what is discharge of contract by impossibility of performance and its implications.
What is Discharge of Contract by Impossibility of Performance?
In some cases, events beyond the control of the parties involved make it impossible to fulfill the obligations outlined in a contract. This situation is known as discharge of contract by impossibility of performance. It occurs when the performance becomes objectively impossible or illegal, rendering it impractical or futile to continue with the agreement.
For instance, imagine a scenario where a company enters into an agreement to provide a specific service, but due to unforeseen circumstances such as natural disasters or government regulations, they are unable to fulfill their obligations. In such cases, the contract can be discharged by impossibility of performance.
However, it is essential to note that mere difficulty or increased expense in performing the contract does not qualify as impossibility. The event must be genuinely unforeseen and render performance of the contract objectively impossible.
Implications of Discharge of Contract by Impossibility of Performance
When a contract is discharged by impossibility of performance, both parties are typically relieved of their obligations under the agreement. The parties are no longer bound by the terms of the contract, and any further performance becomes excused.
In some cases, the discharged party may be entitled to pursue a claim for damages caused by the impossibility of performance. For example, in the case of the Phoenix Pay System in Canada, where the government’s faulty payroll system led to significant financial hardships for employees, a damages agreement was established to compensate the affected individuals.
Conclusion
In conclusion, the discharge of contract by impossibility of performance occurs when events beyond the control of the parties make it impossible to fulfill the obligations of a contract. It relieves both parties from their duties under the agreement, provided that the event causing impossibility is genuinely unforeseen and renders performance objectively impossible or illegal. Understanding the implications of this concept can help individuals and businesses navigate contractual disputes and seek appropriate remedies.
Sources:
- What is Discharge of Contract by Impossibility of Performance
- NY State Separation Agreement Form
- Agreement of General Partnership
- Master Service Agreement Bank
- Copy of Operating Agreement
- What is a Preliminary Agreement
- Phoenix Pay System Damages Agreement
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- Guest House Tenancy Agreement