What does it mean if a contract is considered frustrated?

When a contract is considered frustrated, it means that external events have occurred which significantly change the conditions under which the contract was to be performed, rendering it impossible to fulfill the terms as originally agreed. This could involve unforeseen circumstances, such as changes in law, natural disasters, or other significant events that fundamentally alter the obligations of the parties involved.

In legal terms, frustration of contract leads to the contract being void, as the original purpose and terms can no longer be met due to these external factors. This principle is important as it recognizes that circumstances can change dramatically in ways that neither party could have predicted when they entered into the agreement.

In contrast, the other options do not accurately describe frustration. Successfully completing a contract does not apply, as frustration specifically refers to instances where completion is no longer possible. The mutual agreement of the parties to cancel the contract represents a different scenario entirely, as it involves a consent-based decision rather than an external imposition. Lastly, unclear terms relate to issues of contract interpretation and are not tied to the concept of frustration, which specifically addresses external, unforeseen changes rather than ambiguities within the contract.