Brief Fact Summary. Plaintiff Washington State Hop Producers, Inc. brought an action against Defendant Goschie Farms, Inc. to enforce the contract. Plaintiff appeals from a judgment of the Court of Appeals, which affirmed the trial court’s decision to grant summary judgment to Defendant.
Synopsis of Rule of Law. A contract may be rescinded under the doctrine of “frustration of purpose” by determining that the principal purpose of the party to enter into the contract was frustrated without fault of either of the contracting parties.
Issue. Whether Defendant is entitled to relief under the doctrine of frustration of purpose?
Held. Yes. Judgment affirmed.
The Restatement Second of Contracts states that the doctrine of discharge by supervening frustration occurs where a party’s principle purpose is substantially frustrated without his fault by the occurrence of an event the non-occurrence of which was a basic assumption on which the contract was made, and thus his remaining duty to render performance is discharged unless the language or the circumstances indicate the contrary. The State of Washington has not previously adopted the Restatement Second’s doctrine of supervening frustration.
Under the formula, the purpose that is frustrated must be the principle purpose for making the contract. Here, the principle purpose of this contract was to purchase a hop allotment base provide and created pursuant to a hop marketing agreement. Since Defendant sought to purchase hop base, the inference is that future market access was the principle purpose for entering into the contract. It is clear that this purpose was frustrated due to the decline in value of hop allotments. However, the irrelevance of control of hop base after 1985 that supplies the real frustration of purpose.
Further, Plaintiff here did not allocate the risk to Defendant growers and Defendant did not include any allocating language in its acceptance. The termination here was unforeseeable. The Restatement Second states that foreseeability is merely a relevant factor in determining whether nonoccurrence of the frustrating event was a basic assumption of the frustrated party in entering the transaction. However, if the basic assumption is found, as it is here, the issue of forseeability becomes irrelevant. The fact that it was not foreseeable does not argue the contrary conclusion. The language that suggests that unforseeability is a prerequisite of supervening frustration does not apply in this case. Forseeability of a possible frustrating event is meaningful only where the party seeking relief could have controlled could have controlled the language of the contract to allocate the risk. Here, exclusive control of the contract was in the hands of Plaintiff, and Plaintiff did not do alloca
te such risk.
Discussion. This case is one of the rare cases granting relief under the doctrine of frustration of pur