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Pennsy Supply, Inc. v. American Ash Recycling Corp. of Pennsylvania

Melissa A. Hale

ProfessorMelissa A. Hale

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Pennsy Supply, Inc. v. American Ash Recycling Corp. of Pennsylvania
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    Brief Fact Summary. Pennsy Supply, Inc. had received without charge, a hazardous material from American Ash Recycling Corp. of Pennsylvania (American Ash) (D). Pennsy’s Supply (P) argument is that, disposing of this hazardous material gives enough grounds to result in consideration which is necessary to support various breach of contract, warranty and merchantability claims

    Synopsis of Rule of Law. Grounding contracts and warranty claims brought by the disposer, constitutes sufficient ground for relief of a manufacturer’s legal obligation, to dispose of a material classified as hazardous waste, such that the cost of disposal is avoided by the manufacturer.

    Facts. Paving materials known as Treated Ash Aggregate (TAA) or AggRite, was obtained without cost from American Ash Recycling Corp. of Pennsylvania (American Ash) (D) by a paving subcontractor by name Pennsy Supply, Inc. (Pennsy) (P). These materials were used by the plaintiff in the construction project of driveways and parking lot in a school district.
    After the construction of the driveways and parking lot, the paving started to crack extensively. Pennsy (P) took care of this damage without charging the district for the repairs. This repair work carried out by Pennsy (P) required the plaintiff to remove and appropriately dispose the AggRite which the state had classified as a hazardous waste material. However, American Ash (D) refused to arrange for the removal and disposal of the AggRite after Pennsy (P) notified it to do so.
    Pennsy (P) conveyed his intention to recover costs in a notice to American Ash (D) and also to sue American Ash (D) for promissory estoppel, breach of warranty of fitness for a particular purpose, breach of implied warranty of merchantability and breach of contract. American Ash (D) objected to all these pleadings and this was sustained by the trial court on the ground that its finding showed that any alleged agreement between the parties was unenforceable for lack of consideration. No evidence that disposal costs were part of any bargaining process or that American Ash (D) offered the AggRite with intent to avoid disposal costs was found by the trial court. However, the state’s intermediated court of appeals granted review

    Issue.
    Does the grounding of contracts and warranty claims which was by brought by the disposer, constitute sufficient ground for a relief of a manufacturer’s legal obligation to dispose of a material classified as hazardous waste, such that the manufacturer avoids the cost of disposal?

    Held. (Orie Melvin, J). Yes. Grounding contracts and the warranty claims brought by the disposer, constitutes sufficient ground for relief of a manufacturer’s obligation, to dispose of a material classified as hazardous waste, such that the cost of disposal is avoided by the manufacturer. A very important element of an enforceable contract which must be bargained for as an exchange for a promise is consideration, which can be further defined as a benefit to the promisor or a detriment to the promise. That the promisee has suffered a legal disadvantage at the request of the promisor is not adequate. The disadvantage suffered by the promisee must be “quid pro quo” of the promise and the inducement for which it is made.
    Therefore, a promise is said to be gratuitous and the satisfaction of the condition is not consideration for a contract if the promisor merely had the intention to make a gift to the promise upon the performance of a condition. The allegations which Pennsy (P) made against American Ash (D) in this case not only pointed out that the defendant made a conditional gift of the AggRite to the plaintiff, but that American Ash (D) in order to avoid the cost of disposing the AggRite, gave out the AggRite in an effort to transfer the cost burden on the disposal.
    Therefore, Pennsy (P) assumed the detriment of collecting and taking title to the material because Pennsy (P) was induced to receive the supply of AggRite free of charge from American Ash (D). The detriment Pennsy (P) now suffers was the same detriment which induced American Ash (D) to give out the AggRite free of charge. Also, the absence of an actual bargaining process between the parties is not necessary to establish consideration, but this merely shows that the promise induced the detriment and the detriment induced the promise if the fact is proven.
    If the allegations Pennsy (P) made against American Ash (D) can be proven to be true, this would indicate sufficient consideration to support estoppel claims, breach of contract and breach of warranty. The ruling was reversed and remanded.

    Discussion. the difference show between conduct that is a condition to a gift and conduct that constitutes consideration is not a clear one due to the fact that the very same conduct may be a condition to a gift or a consideration depending on how the parties treat the conduct. In determining which construction of the promise is more reasonable is an inquiry into whether the occurrence of the condition would be of advantage to the promisor. This is shown in 17A Am. Jur. 2d S 104 (2004 & 2005 Supp). as “(a)n aid which is not a conclusive test. When this is so, it is a fair inference that the occurrence was demanded as a consideration. Conversely, if the occurrence of the condition is not advantageous to the promisor but it is just to enable the promisee to take custody of the gift, the occurrence of the event on which the promise is conditional, which was brought about by the promisee by relying on the promise, is not properly construed as consideration.”


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