Weaver v. Am. Oil Co.

257 Ind. 458, 276 N.E.2d 144 (1971)

 

RULE:

The basic test of unconscionability is whether, in light of the general commercial background and the commercial needs of the particular trade or case, the clauses involved are so one-sided as to be unconscionable under the circumstances existing at the time of the making of the contract. 

FACTS:

The oil company's employee sprayed gasoline over the gas station lessee and his assistant, causing them to be burned and injured on the leased premises. The lease with the oil company contained a "hold harmless" clause exculpating the oil company from liability for its negligence, and further compelling the lessee to indemnify the oil company for any damages or loss incurred as a result of its negligence. The trial court found the gas station lessee liable under the terms of the lease; the appellate court held that the exculpatory clause was invalid and that the indemnifying clause was valid. 

ISSUE:

Are the contested contract provisions considered unconscionable?

ANSWER:

Yes.

CONCLUSION:

The facts of this case reveal that in exchange for a contract which, if the clause in question is enforceable, may cost Mr. Weaver potentially thousands of dollars in damages for negligence of which he was not the cause, Weaver must operate the service station seven days a week for long hours, at a total yearly income of $ 5,000-$ 6,000. The evidence also reveals that the clause was in fine print and contained no title heading which would have identified it as an indemnity clause. It seems a deplorable abuse of justice to hold a man of poor education, to a contract prepared by the attorneys of American Oil, for the benefit of American Oil which was presented to Weaver on a "take it or leave it basis". Unjust contract provisions have been found unenforceable, in the past, on the grounds of being contrary to public policy, where a party has a greater superior bargaining position. In Penn. Railroad Co. v. Kent (1964), 136 Ind. App. 551, 198 N. E. 2d 615, Judge Hunter, speaking for the court said that although the proposition that "parties may enter into such contractual arrangements as they may desire may be conceded in the general sense; yet when such special agreement may result in affecting the public interest and thereby contravene public policy, the abrogation of the rules governing common carriers must be zealously guarded against."

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