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A manufacturer can be relieved of its obligation to dispose of hazardous waste and avoid the cost of its disposal if the disposer brings grounding contracts and warranty claims.
Pennsy Supply, Inc. received paving material for free from American Ash Recycling Corp. of Pennsylvania for its business as a paving subcontractor. The material, which was known as Treated Ash Aggregate or AggRite, was used on a school district construction project on driveways and parking lots. Pennsy fixed problems with the material at no cost to the district, including removing and disposing of it according to state procedures on hazardous wastes. However, American Ash rejected Pennsy's requests to arrange for the removal and disposal process, even after Pennsy informed it that it planned to recover costs.
Pennsy brought a claim on several theories, including breach of contract, breaches of various warranties, and promissory estoppel. The trial court dismissed the case after finding that there was no consideration for the agreement, which made it unenforceable. (In other words, Pennsy had received the material for free.) The disposal costs did not appear to have contemplated during the negotiations, and Pennsy had not made its offer contingent on American Ash handling disposal costs.
- Orie Melvin (Author)
A contract must have consideration to be deemed valid, and it must be bargained for in exchange for a promise. It can consist of either a legal detriment to the promisee or a legal benefit to the promisor, but the benefit or detriment must be the price of the promise and the reason why it was made. Gifts are not considered to be consideration but merely the subject of gratuitous promises. The AggRite was given to Pennsy in part so that American Ash would not incur disposal costs. Shifting responsibility for collecting and taking title to the material was a legal detriment that induced American Ash to provide the material for free. Consideration thus is present, interpreting all of the facts in the most favorable light for Pennsy, even though there was no bargaining between the parties.
It is often difficult to draw the line between a condition to a gift (not consideration) and consideration, but it depends on the circumstances of each case. Some courts rely on investigating whether the promisor would be benefited if the condition occurs.
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