When a contract becomes impossible or impracticable to perform, which remedy would a business person prefer—rescission or reformation? Explain your answer.

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 adjust the terms of (reform) 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 in view of the disruption in expectations, thus making the contract fair to the parties.