What can terminate a party's obligation if an unforeseen event occurs after the contract is formed?

The correct choice highlights two distinct legal doctrines that can terminate a party’s obligation in a contract when unforeseen events occur after the contract has been established.

Commercial impracticability arises when an unforeseen event makes the performance of contractual duties excessively burdensome or costly to one party. If such a situation occurs, the affected party may be excused from fulfilling their obligations under the contract. This doctrine recognizes that certain external factors can render performance not just difficult, but impracticable due to circumstances that were not predicted at the time the agreement was made.

On the other hand, frustration of purpose occurs when an unforeseen event fundamentally changes the nature of the agreement. If the underlying purpose of the contract can no longer be achieved due to this event, the affected party may also be relieved from their obligations. This is particularly relevant in scenarios where the very essence of the contract is disrupted, making it impossible to fulfill the original intent of the parties involved.

Both of these doctrines reflect the principle that contracts are based on the assumption that certain conditions will prevail. When those conditions are substantially altered by unforeseen events, it is considered fair and just to relieve parties from their contractual duties. Thus, recognizing both commercial impracticability and frustration of purpose as valid reasons for terminating obligations ensures that parties