Enforceable Contract Between a Supplier of Products and An Administrative Agency
Can a Supplier of Products Ask for Recovery If An Administrative Agency Does Not Have Statutory Authority to Enter Into An Enforceable Contract With Them ?
In Air Quality Products, Inc. v. State of California (1979) 96 Cal. App. 3d 340 157 Cal. Rptr. 791, an administrative agency (the State Air Resources Board) approved an exhaust emissions control device developed by the plaintiff, but then approved a similar, but less expensive device produced by a competitor. (Id. at pp. 345-346.)
The agency told the plaintiff that it would require installation of its device in 15 percent of 1955-1965 cars if the plaintiff met several specific requirements. (Id. at p. 346.)
The plaintiff allegedly met each of the agency's requirements and, reasonably relying on the agency's "inducements," produced 90,000 devices at a cost of $ 2 million. (Ibid.)
The agency thereafter changed its requirements and repudiated the representations made to the plaintiff, rendering the product unmarketable. (Ibid.)
The Air Quality Products court held that even if the complaint adequately alleged the elements of an implied contract or promissory estoppel, the plaintiff could not recover because the agency had no express or implied constitutional or statutory authority to enter into an enforceable contract with the plaintiff. (Id. at pp. 350-351.)