Discharge of Contract by Impossibility of Performance
Discharge of contract by impossibility of performance occurs when the contractual duty cannot be performed because of a reason caused by the other party.3 min read
Discharge of contract by impossibility of performance usually occurs when the contractual duty cannot be performed because of death, illness, or a reason caused by the other party. Objective impossibility is when no one can provide the service due to frustration of its purpose, destruction of subject matter, or supervening impossibility. Subjective impossibility occurs when the promisor is unable to perform the service due to death or illness.
- Performance – obligation completed as part of a contract.
- Partial Performance – not fully completing the performance as stated in the contract. For example, a contract lists several acts or deliveries with payment for each act. Partial completion may be delivered or performed, but there is an absence of complete performance.
- Breach of Contract – failure or non-performance of a contractual duty.
Duties Discharged Under a Contract
Unforeseen or unexpected events can affect the performance of a contract. During the performance of a contract, if events occur that could not be predicted by either party, the possibility of performing the contract could become impossible and ultimately create a discharge from the duty to perform.
Additionally, a performance of the contract could become impossible if there is an additional or unexpected event that frustrates the terms of the contract. In this event, the parties may have the performance of the contract discharged.
Does the Breach of Contract End If There Is an Impossibility of Performance?
Depending on the facts surrounding the breach of contract, the breaching party may or may not be liable for damages caused – even if the job performance is physically impossible.
Types of Impossibility of Performance
Post-contractual impossibility, also known as the Doctrine of Frustration, occurs when an impossibility to complete a contract comes after the contract is created. This type of impossibility makes the contract void, and the parties involved are released from performing the contract equaling a discharged contract.
Void from the Beginning, also known as Impossibility at the Time of Agreement, occurs when the contract is invalid from the formation. When this happens, there are no obligations or rights created from the beginning.
The statute of limitations and bankruptcy can also discharge these obligations by operation of law. When a contractual obligation is terminated in this way, there is no liability to either involved party. Although, if there is an abandonment of performance or rejection of contractual agreement, this creates a breach of contract and will result in liability to the offending party.
Difference Between Frustration and Impossibility
Frustration or impracticability occurs when a performance would be deemed impractical because of an unforeseen event. Impossibility occurs when a party is not able to complete a contract because of an event that happens after the contract is executed. The main difference is that frustration means a contract cannot be performed because of an extreme burden to the contracting party, while impossibility means the contract cannot physically be performed.
There are only certain events where frustration and impossibility can be applied. Usually, these terms apply when there a risk involved in the performance of a contract, making it impossible or frustrated through no fault of the parties involved or the courts. When this occurs, the parties are released from their obligation to perform the contract automatically.
Methods of Voluntary Discharge
There are three methods of voluntary discharge: novation, accord, and satisfaction. A novation will occur when a new party is substituted to perform the contract, releasing the original party from the agreement. All parties must agree, and a new contract, with the same terms, is created. The only change is the parties involved.
An accord will occur when the receiving party agrees to a performance different than the one owed under the contract. All parties must agree to the change.
A satisfaction will occur if the elements outlined in the accord contract are performed as agreed. When this happens, there is a satisfaction of the performance.
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