NCEES FE Exam Ethics Practice Test 2025 – Complete Study Resource

A contract may be terminated due to illegality when the terms or purpose of the contract violate legal statutes or public policy. If a contract involves illegal activities, such as committing a crime or breaching regulations, it is rendered void ab initio, meaning it is treated as though it never existed. This ensures that the legal system does not support or enforce agreements that compromise ethical standards or societal laws.

In contrast, the other options refer to aspects of contract execution or the relationship between the parties. Material compliance generally refers to a party fulfilling their obligations as specified in the contract rather than being a reason for termination. Performance success implies the contract is executed effectively, which would not warrant termination. Mutual benefit describes a scenario in which both parties gain from the agreement, which typically does not lead to termination unless other issues arise. Thus, illegality stands out as a direct cause for contract termination among the provided choices.