Indiana Business Lawyer Blog
Many co-ops use outside companies for pole testing and inspection. These companies often propose a form agreement with “standard” terms. Pricing is sometimes addressed in a separate letter with the base agreement remaining in effect for years.
Beware of standard terms proposed by some companies. For example, the contract utilized by one prominent company requires the utility to give it written notice within thirty days of any incident resulting in the breakage of a pole. Also the utility is required to retain the pole in storage for inspection by the company. Should the notice not be given or the pole not be preserved and the inspection company would later be sued on some theory, the contract requires the utility to bear the company’s defense costs and any liability that might result.
Out-of-control vehicles occasionally strike roadside utility poles. The pole may or may not break, but serious injury or property damage often results. Sometimes the utility has no reason to expect that anything will come of it. But up to two years later a suit might be filed against the utility. The claim might be that the pole was decayed or brittle or that it was “oversized” and posed a dangerous obstacle to the motoring public. Sometimes it was placed “too close” to the roadway. The inspection company may also be joined in the suit, either by the claimant or the utility. If it has not given the required notice and taken steps to preserve the pole, the utility may face additional exposure for the company’s own costs and potential liability.
Over the past decade Indiana courts have allowed juries to consider injury claims against utilities arising from vehicle/pole collisions. Because utilities normally exercise prudence in placing, inspecting, and maintaining their poles, they often prevail in these cases. But if independent companies are being used for inspection and testing, remember that contractual terms are both important and negotiable. If the company wants the business, it may be willing to soften some of the harsh notice requirements. Once in effect, the agreed upon terms should be reviewed occasionally to ensure the utility performs as required.
This article was written by Kent Frandsen a partner in the law firm of Parr Richey Frandsen Patterson Kruse who often defends Indiana coops in liability suits.
The statements contained herein are matters of opinion and general information only and are not to be considered legal advice and should not be construed to form an attorney-client relationship. If you have any questions regarding this article, please contact an attorney.
