Court of Appeals applies "frustration of purpose" doctrine to energy contract

The failed deregulation of the California energy markets in the late 1990s continues to have repercussions in the courts.  Yesterday the Oregon Court of Appeals held that the manipulation of those markets, resulting in skyrocketing prices in 2000 and 2001, may have been sufficiently severe to void a contract between an electrical utility and its customer in Oregon.  In Wah Chang v. Pacificorp, the court held that Wah Chang, an electricity customer of Pacificorp, brought forward evidence "that California's energy markets had been subjected to manipulation so egregious and pervasive, and so unprecedented in its scope and magnitude, as to be beyond the parties' reasonable contemplation" when they entered into their contract in 1997.  This evidence is sufficient to proceed to trial on Wah Chang's theory that the rarely-used doctrine of "frustration of purpose" voided its obligations under the contract.