Contracts and Sales Multistate Bar Practice Exam

What type of discharge occurs when a party cannot perform due to unique skills being required?

1. Discharge by release

2. Discharge by novation

3. Discharge by impossibility

4. Discharge by frustration of purpose

The correct answer is: Discharge by impossibility

Discharge by impossibility is applicable when a party is unable to fulfill their contractual obligations due to unforeseen circumstances that render performance physically or legally impossible. In scenarios where unique skills or abilities are required for a contract's performance, the loss of the individual possessing those skills can lead to impossibility. For example, if a contract is for the services of a specific artist, and that artist becomes incapacitated, the contract cannot be performed as intended. This route of discharge does not rely on the voluntary agreement of the parties, nor does it pertain to changes in circumstances that might make the contract less favorable. Instead, it focuses on situations where external factors, such as the particular capabilities or circumstances of the obligated party, have changed to such a degree that performance is no longer feasible. Other forms of discharge, such as by release or novation, involve mutual agreement among the parties or substitutions of obligations, while frustration of purpose pertains to situations where the fundamental reason for the contract has been undermined, rather than an inability to perform due to specific skill requirements.