What does "impossibility of performance" refer to in contract law?

"Impossibility of performance" refers specifically to situations where unforeseen events make it impossible for one or more parties to fulfill their contractual obligations. This legal doctrine acknowledges that certain circumstances—such as natural disasters, changes in law, or the destruction of the subject matter of the contract—can prevent parties from performing as agreed.

When such an event occurs, the impacted party may be excused from liability for breach of contract because the inability to perform is not due to their own fault but rather due to an external factor beyond their control. This concept is essential in contract law, as it helps to provide fairness and justice to parties when unexpected and uncontrollable events occur.

The other options do not capture the nuance of "impossibility of performance." A deliberate decision not to fulfill a contract does not relate to unforeseen events; it pertains more to a voluntary breach. Similarly, while a type of breach of contract could involve inability to perform, "impossibility of performance" is a specific legal defense rather than a breach itself. Lastly, mutual agreement to terminate a contract does not involve an external event inhibiting performance but rather an active choice by both parties to end the contractual relationship.