Contracts and Sales Multistate Bar Practice Exam

What is the effect of the death or incapacity of a necessary person in a contract?

1. The contract is always deemed void

2. Only if the individual’s skills are unique, it may discharge the contract

3. All parties can continue the contract without change

4. A new contract must be formed to replace the old one

The correct answer is: Only if the individual’s skills are unique, it may discharge the contract

The situation involving the death or incapacity of a necessary person in a contract can significantly affect the enforceability of that contract. When the individual whose presence or unique skills are essential to the contract passes away or becomes incapacitated, the contract may be discharged if their specific contributions are irreplaceable. This aligns with the principle that if a contract relies heavily on the unique expertise or personality of an individual, their absence creates a situation in which the contractual obligations cannot be fulfilled as originally intended. In cases where the individual’s skills are unique, the loss results in a fundamental change in the conditions of the contract, thereby making it impossible or impractical to continue honoring the terms without the necessary person. Therefore, the contract may be deemed discharged due to the impossibility of performance based on the absence of key personal involvement. This understanding highlights the legal principle of personal service contracts, where the identity and abilities of the parties are crucial to the contract's execution. In contrast, for contracts that do not hinge on unique skills or personal services, such as those involving commercial goods, the death or incapacity of one party might not necessarily dissolve the agreement.