What does the term "operation of law" refer to in the context of contract termination?

The term "operation of law" in the context of contract termination specifically refers to situations where a contract is terminated not because of the actions or decisions of the parties involved, but due to specific legal reasons. This can include various circumstances such as the death of one of the parties, bankruptcy, or changes in legislation that affect the validity or enforceability of the contract. These are instances where the law itself provides the ground for ending a contract, highlighting the power of legal frameworks in determining contractual relationships.

In contrast, other options involve different concepts related to contracts. A change of ownership refers to the transfer of rights or property, which does not inherently mean the contract is terminated. Agreement by all parties suggests a mutual decision to terminate, which falls outside of the scenario of termination by legal force. Lastly, a failure to perform relates to a breach of contract rather than a termination driven by legal mechanisms. Thus, the focus on legal reasons in the correct answer accurately captures the essence of "operation of law" in contract termination.