Court of Appeals of Colorado, 1974
Pierce
Threadgill – Appellant - Plaintiff – lost equipment in drill hole
Peabody – Appellant -Defendant– drilled the hole / owner of the land
Relief Requested: relief from a judgment holding liability for damages for the loss of certain equipment owned by the Π which was lost in the process of probing test holes drilled by Peabody.
Facts: Peabody drilled test holes for the purpose of locating coal deposits. Once the holes where dug the Π used equipment to test soil samples in the holes. During this process, the Π’s equipment became stuck in one of the holes. Peabody tried to recover the stuck equipment with out success.
History: Trial court found that there was an express contract between the parties but no express agreement upon the placement of the risk of lass of the probing device. The Π had satisfactorily established ‘ a certain practice or custom in the drilling industry which places the risk of probe loss on the driller (Peabody). The trial court found neither party negligent. However, the court ruled that negligence was immaterial under the trade practices and places a duty of strict liability on Peabody.
I.
Issue: Whether ‘custom or common trade usage’ are binding terms to a contract when not expressly defined in the terms of the contract.
Holding: There was sufficient evidence to support a finding of a general trade usage which permitted the inference that the parties must have contracted with reference to it.
Reasoning: Although the Δ deny that they were aware of the ‘trade usage’, the Π produced witnesses that attested to the fact that such a ‘trade usage’ does exist. In addition, the driller (Peabody) has primary control over drilling the hole and informs the prober when the hole is ready for the probing equipment. Furthermore, once the probe is lodged in the hole, the prober must rely on the driller to retrieve the equipment. Lastly, the loss of equipment is generally considered to be a cost to the land owner (Peabody).
Rule: To be binding upon a party, a trade usage must be ‘sufficiently general so that the parties could be said to have contracted with reference to it.’
II.
Issue: Whether ‘custom or common trade usage’ create a duty of strict liability and thus bar any negligence claims.
Holding: To the extent that the trade usage before us purports to relieve the contractor of the consequence of his own negligence, it is in conflict with the express public policy of this state.
Reasoning: Public policy, in Colorado, dictates that parties cannot contract away their potential for their own negligence. If one can not expressly contract away their liability for negligence, then an implied agreement arising out of custom or trade usage will not be given that effect. Only an express clause of a contract between two parties of equal bargaining power will such a clause be enforceable.
Rule: Trade usage does not indemnify a defendant from liability for negligence.