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

Dispute

Pennsy, a subcontractor, was made aware that American Ash, a recycling company, offered Treated Ash Aggregate (AggRite) at no cost for use in paving work. After obtaining and using 11,000 tones of AggRite, Pennsy learned that the material developed extensive defects, and was ordered to replace it under a separate contract. Pennsy sued American Ash to recover the costs of removal and disposal of AggRite, which was hazardous waste. Dismissed by trial court, appealed.

Rules of law

In the formation of a contract, a detriment to a promisor must induce the promise, and the promise to the promisee must induce the detriment. Consideration must not be incidental, but bargained for as the exchange for the promise.

If the occurence of a named condition would benefit the promisor, the occurrence was requested as consideration.

Arguments

American Ash argued that there was no contract because there was no consideration and they had offered the AggRite freely, with no exchange or bargain from Pennsy. They argued that the AggRite was merely a conditional gift.

Pennsy argued that the disposal of the hazardous waste was a benefit to American Ash and a detriment to them, and that American Ash was offering the product on the basis of that benefit.

Conclusion

The court concluded that American Ash was induced to offer the product at no cost by the advantage of not having to dispose of it, and therefore valid consideration existed. The court further concluded that although the avoidance of disposal costs was not discussed by the parties, this was not a requirement of the bargain theory of consideration; the promise and consideration merely needed to have a reciprocal nature.

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