Legal Definitions - impossible contract

An impossible contract refers to a situation where, after a contract has been formed, an unforeseen event occurs that makes it objectively impossible for one or both parties to fulfill their agreed-upon obligations.

It's important to distinguish this from a situation where performance merely becomes difficult, expensive, or unprofitable. For a contract to be deemed impossible, the performance must be genuinely beyond the capability of anyone to achieve, not just the specific party involved, due to circumstances outside their control and not anticipated at the time the contract was made. When a contract becomes impossible to perform, the parties may be excused from their obligations, and the contract can be terminated.

Here are some examples:

• Destruction of Unique Subject Matter: Imagine a rare car collector contracts to purchase a specific, one-of-a-kind vintage automobile from a private seller. Before the sale is finalized and the car delivered, an unexpected fire breaks out in the seller's garage, completely destroying that particular vehicle.

  Explanation: The contract was for that specific, unique car. Since the car no longer exists, it is objectively impossible for the seller to deliver the agreed-upon item, and the contract would likely be considered impossible to perform.

• Death or Incapacity of a Unique Service Provider: Consider a client who hires a world-renowned sculptor, known for their distinctive style, to create a custom art piece for a new building. Before the sculptor can begin the work, they suffer a sudden, severe injury that permanently prevents them from using their hands in the way required for their craft.

  Explanation: The contract was specifically for the unique skills and artistic talent of that particular sculptor. Because of their unforeseen and permanent incapacity, it becomes objectively impossible for them to personally perform the contracted service, excusing both parties from their obligations.

• Change in Law Making Performance Illegal: A company enters into a contract to export a large quantity of a specific chemical compound to another country. After the contract is signed but before the shipment can be made, the government of the importing country enacts a new law that bans the import of that particular chemical compound due to newly discovered environmental risks.

  Explanation: When the contract was formed, exporting the chemical was legal. However, the subsequent change in law makes the performance of the contract (importing the chemical) illegal and thus objectively impossible for the company to fulfill without breaking the law.