When Can a Contract Be Discharged by Operation of Law

When a contract is formed, both parties are expected to fulfill their obligations in accordance with the terms of the agreement. However, in certain circumstances, a contract may be discharged by operation of law. This means that the contract is terminated by law without either party being in breach. Here are some situations where a contract can be discharged by operation of law.

1. Frustration of purpose

If an event occurs that makes it impossible to fulfill the purpose of the contract or frustrates the parties’ expectations, the contract may be discharged by frustration. For example, if a contract was made for the delivery of goods and the goods are destroyed before delivery, the contract will be frustrated because the purpose of the contract cannot be achieved.

2. Impossibility of performance

A contract may also be discharged if performance becomes impossible due to an unforeseeable event that is beyond the control of the parties. This includes events such as war, natural disasters, or government intervention. For instance, if a shipment of goods is delayed or destroyed due to a natural disaster, the contract may be discharged due to the impossibility of performance.

3. Breach by a party

If one of the parties breaches the contract, the other party may be entitled to discharge the contract by operation of law. This includes situations where one party fails to fulfill their obligations, such as failing to deliver goods or failing to pay an agreed sum of money.

4. Death or incapacity of a party

If one of the parties dies or becomes incapacitated, the contract may be discharged by operation of law. This is because the contract was formed between two specific individuals or entities, and if one of them is no longer able to fulfill their obligations, the contract can no longer be performed.

5. Illegality

If the subject matter of the contract becomes illegal or contrary to public policy, the contract may be discharged by operation of law. For example, a contract for the sale of illegal drugs is considered illegal and unenforceable.

In conclusion, there are various situations where a contract can be discharged by operation of law. These include frustration of purpose, impossibility of performance, breach by a party, death or incapacity of a party, and illegality. It`s important for both parties to understand their rights and obligations under a contract, and seek legal advice if any issues arise.