This clause lets either party exit the contract if new laws make it illegal or impossible to perform. For example, if you contract to import a product and the government suddenly bans that product, this clause would let you walk away without breach. This is based on the legal principle called "frustration of contract" in UK law or "impossibility" in US law—courts recognize that parties shouldn't be forced to break the law. However, this clause is low-risk because courts already protect you somewhat, and genuine legal changes are rare.
This is one of the few clauses where you don't need to negotiate hard—it's usually fair to both sides. Just make sure it requires *actual* legal impossibility, not just increased costs or inconvenience (a price increase doesn't count). Ask for a 60-90 day wind-down period rather than immediate termination, so both parties can adjust. ---
Frequently Asked Questions
What does this clause mean in simple terms?
This clause lets either party exit the contract if new laws make it illegal or impossible to perform.
Why should I care about this clause?
For example, if you contract to import a product and the government suddenly bans that product, this clause would let you walk away without breach.
What are my options?
This is based on the legal principle called "frustration of contract" in UK law or "impossibility" in US law—courts recognize that parties shouldn't be forced to break the law.
How does this affect small businesses?
However, this clause is low-risk because courts already protect you somewhat, and genuine legal changes are rare.