Question 32

A contract is terminated if it is impossible for one of the parties to perform.

A contract is deemed terminated when it becomes impossible for one of the parties to fulfill their obligations. This situation effectively nullifies the contract as it can no longer be executed as originally intended.

A) one of the parties decides not to go forward.

While a party may choose not to proceed, this decision alone does not automatically terminate the contract. The contract may still be enforceable unless both parties mutually agree to end it or some other condition for termination is met.

B) a third party intervenes.

The intervention of a third party does not necessarily lead to the termination of a contract. Unless the third party has specific rights or authority related to the contract, their involvement does not affect the validity or enforceability of the existing agreement between the original parties.

C) it is impossible for one of the parties to perform.

This option correctly identifies a key condition for contract termination. When performance becomes impossible—due to factors such as unforeseen events or changes in law—the contract is terminated because one party can no longer meet their obligations.

D) one party assigns the rights to another.

The assignment of rights does not terminate a contract; rather, it allows one party to transfer their benefits under the contract to another party. The original contract remains in effect unless specifically stated otherwise within the terms of the agreement.

Conclusion

The correct answer, C, highlights a fundamental principle of contract law: impossibility of performance results in termination. Other options do not fulfill the necessary criteria for contract termination, as they either rely on subjective choices or actions that do not affect the contractual relationship directly. Thus, C stands out as the definitive condition under which a contract is terminated.