What is an example of contract termination by operation of law?

Contract termination by operation of law refers to situations where a contract is automatically terminated due to certain legal events or circumstances beyond the control of the parties involved. In this context, the correct choice demonstrates how external legal circumstances can render a contract void.

When a government declares war, this can lead to automatic termination of contracts between parties, especially if performance of those contracts becomes impossible or illegal due to the state of war. The legal principle here is that the government’s action has a direct effect on the enforceability of agreements, thereby terminating them without any action or fault from the contracting parties.

In contrast, fulfillment of contractual obligations represents the successful completion of a contract rather than its termination. The destruction of one party's property might lead to a breach or frustration of contract but does not automatically terminate the agreement. Lastly, a party’s unilateral decision to breach a contract does not qualify as termination by operation of law; instead, it may lead to legal consequences, including potential claims for damages but does not terminate the contract on its own.