Hops Trust v. Goschie Farms

• For 20 years, the US Agriculture Department required hop producers to obtain allotments
• Without an allotment, a grower couldn't enter the hop market
• Washington State Hop Producers, Inc. = a company formed in 1979 to acquire, produce, & sell hop allotments
• Washington State Hop Producers, Inc. became Liquidation Trust = "Trust" in February 1985
• The Agriculture Department did away with the allotment requirement for hops growers in June 1985 with an effective date of the end of December 1985
• The value of hops allotments that the Trust was selling decreased by 90% in 1986
• Goschie Farms, Inc. = "Goschie" = bidder for hops allotment in 1985
• Goschie decided to not pay the Trust in 1986 because it didn't want the hops allotment anymore

• The Trust sued Goschie & other hops growers for not buying its allotments in a Washington state court
• The Trust lost in the trial court
• The Washington Court of Appeals affirmed the loss of the Trust under the doctrine of supervening frustration

Is 1 party's performance discharged when a change in circumstances renders 1 party's performance virtually worthless to the other, frustrating the other party's purpose in making the contract?

Yes; a party's performance is discharged when a change in circumstances renders 1 party's performance worthless to the other, frustrating the other party's purpose in making the contract.

Affirmed

Justice Smith: Supervening frustration dis-charges a party's performance.

The non-occurrence of the supervening event must be a basic assumption of the contract. The hops growers never expected the Agriculture Department to suddenly do away with the hops allotments starting in 1986. The regulatory change was completely out of the blue.