How does a change in law affect contract performance?

A change in law can significantly affect the performance of a contract, particularly when it creates conditions that render the agreement impossible to fulfill. If a new law introduces restrictions or imposes obligations that contrast with the original terms of the contract, parties may find themselves unable to complete the tasks or obligations set forth in the agreement.

For example, if a contract was established before a new law was enacted that prohibits a specific activity, the party responsible for performing that activity cannot comply with the contract because doing so would violate the law. This scenario illustrates the principle of "impossibility of performance," which can excuse a party from liability under the contract.

In contrast, other options suggest scenarios that are less plausible. Stating that a change in law always simplifies contract fulfillment overlooks the complexities that legal changes can introduce. Asserting that there is no effect on existing contracts fails to recognize the dynamic nature of law and its potential impact. Lastly, suggesting that only contracts involving public entities are influenced by legal changes is too narrow, as private agreements can also be significantly affected. Therefore, the ability to fulfill a contract can be profoundly impacted by the enactment or alteration of laws, making the correct answer that such changes can make fulfilling the contract impossible.