## Facts

- A public lake district sold dredged sand to a buyer who intended to resell it as “frac sand.”
- The parties signed a written agreement granting the buyer exclusive purchase rights for five years at \$1.50 per ton.
- The buyer agreed to purchase at least 2,000 tons per month (except during road bans), creating a continuing minimum monthly purchase/payment obligation.
- The agreement disclaimed warranties and provided the buyer purchased the sand “as is.”
- The contract allowed the buyer to terminate, in the buyer’s sole opinion that the sand could not be used as frac sand, but only upon thirty days’ written notice.
- The buyer stopped hauling and paying for sand after June 2012 because he could not resell it as frac sand, but he did not provide written termination notice until October 18, 2013.
- The seller demanded unpaid amounts due under the minimum monthly obligations for the period the contract remained effective, and sought contract interest.
- The trial court dismissed the seller’s claim, treating the breach as only the late written notice and holding the claim barred by frustration of purpose.

## Issues

1. Whether the actionable breach was the buyer’s nonpayment of the contract’s minimum monthly obligations (rather than merely the buyer’s failure to provide timely written termination notice).
2. Whether frustration of purpose excused the buyer’s nonpayment because the sand could no longer be resold as frac sand.

## Decision

- The appellate court reversed and remanded with directions to enter judgment for the seller for contract damages due (unpaid minimum monthly amounts through the effective termination date, plus interest).
- The court held the relevant breach was the buyer’s failure to pay amounts required by the minimum monthly purchase obligation while the contract remained in force.
- The court rejected frustration of purpose because the contract language showed the risk of unsuitability/marketability was allocated to the buyer through the “as is”/no-warranty clause and the specified written-notice termination mechanism.

## Legal Principles

- When a contract requires termination by specified written notice and a waiting period, performance and payment obligations continue until termination becomes effective under the contract.
- A party’s unilateral cessation of performance without complying with contractual termination procedures constitutes breach as to accrued obligations.
- Frustration of purpose is unavailable where the alleged frustrating event is not a basic assumption of the contract because the contract expressly contemplates and allocates the relevant risk (including by “as is” and no-warranty provisions).
- A bargained-for unilateral termination right conditioned on written notice indicates the parties anticipated the potential problem and agreed on the exclusive method for ending future obligations.

## Conclusion

The court ordered judgment for the seller because the buyer’s minimum monthly payment obligations continued until termination became effective by required written notice, and the buyer could not avoid liability on frustration-of-purpose grounds where the contract disclaimed warranties and allocated the risk of nonmarketability to the buyer.


Lake Altoona Rehab. & Prot. Dist. v. Jereczek, 2018 WI App 28, 381 Wis. 2d 464, 912 N.W.2d 208 (Ct. App. 2018)