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

Superior Court of Pennsylvania · Contracts

ContractsConsiderationUCC Article 2Promissory EstoppelWarrantiesconsiderationconditional giftbargained-for exchange

Facts

For a school construction project, the project specifications allowed the paving subcontractor to use American Ash's AggRite, a treated ash aggregate, and stated that it was available at no cost from American Ash. Pennsy obtained about 11,000 tons of AggRite from American Ash and used it in the paving work. After the pavement cracked, Pennsy performed remedial work and removed and disposed of the AggRite, which Pennsy alleged was hazardous waste, incurring substantial costs. Pennsy alleged American Ash promoted AggRite and supplied it free in order to have others take and dispose of it, thereby saving American Ash disposal costs.

Issue

Did Pennsy's complaint sufficiently allege consideration to support a contract claim, a sale of goods under UCC Article 2 to support warranty claims, and a promise plus reliance sufficient to support promissory estoppel? More specifically, could American Ash's avoidance of disposal costs constitute the bargained-for benefit or price even though Pennsy paid no money for the AggRite?

Rule

Consideration exists when the promise induces the detriment and the detriment induces the promise; the key question is whether the alleged occurrence benefited the promisor so that it is fair to infer it was requested as consideration rather than as a mere condition of a gift. Under UCC Article 2, a sale consists of passing title for a price, and the price may be payable in money or otherwise, including non-monetary consideration sufficient to ground a contract. Promissory estoppel requires a promise the promisor should reasonably expect to induce action or forbearance, actual reliance, and enforcement necessary to avoid injustice, and the promise may induce action by the promisee or a third person.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In Columbus, Ohio, Lakeview Minerals offered contractors unlimited quantities of processed slag aggregate "at no charge" for use in private road projects. Mason Ortiz Trucking accepted 8,000 tons after Lakeview had circulated materials stating that every ton taken by contractors spared Lakeview the expense of sending the slag to a regulated disposal site.

If Mason sues Lakeview for breach of contract after the aggregate proves defective, which is the strongest argument that consideration was adequately alleged?

Explanation. Consideration exists when the promise induces the detriment and the detriment induces the promise. A no-cash transfer is not necessarily a gift. If the supplier offered the material so others would take title and thereby relieve it of disposal costs, that avoided cost is a benefit to the promisor and supports an inference of reciprocal inducement rather than a conditional gift.