Impossibility or Impracticability of Performance in Germany

In the United States, when a party alleges that contract performance is impossible or impracticable because of circumstances unforeseen at the time the contract was formed, a court will either discharge the party's contractual obligations or hold the party to the contract.

In other words, if a court agrees that the contract is impossible or impracticable to perform, the remedy is to rescind (cancel) the contract.

Under German law, however, a court may reform (adjust the terms of) a contract in light of economic developments.If an unforeseen event affects the foundation of the agreement, the court can alter the contract's terms to align with the parties' original expectations, thus making the contract fair to the parties.

Question Presented

When a contract becomes impossible or impracticable to perform, what options does a businessperson have?