Hemlock Semiconductor Operations, LLC v. SolarWorld Industries Sachsen GmbH

Hemlock Semiconductor (plaintiff) agreed to supply SolarWorld (defendant) polysilicon for 14 years under take-or-pay agreements requiring SolarWorld to buy a minimum amount yearly (or pay for it) with liquidated-damages provisions. Later, market conditions changed dramatically (in part due to Chinese government action affecting polysilicon prices), and SolarWorld asserted frustration of purpose to escape its obligations.

Whether the frustration-of-purpose defense requires that an alleged unforeseeable event substantially frustrate the parties' primary purpose in making the contract.