Defining the Role of Industry Custom and Usage in Oil & Gas Litigation

Abstract:     
Industry custom and usage evidence can be powerful; sometimes it will be the determinative factor in litigation. Litigants frequently seek to use custom and usage evidence to resolve interpretive and substantive issues arising in property, contract, tort, agency, and other legal disciplines, including the discipline we call oil and gas law.¿ This article analyzes the role custom and usage evidence plays in litigation concerning the oil and gas industry. The same analytical observations can be made of other industries. Each industry will have its own unique ways of doing business their own customs and usages-- their own way of doing things.

Analysis of existing case law reveals that custom and usage evidence has been employed for many different purposes with courts employing differing threshold procedural and substantive requirements depending upon the context in which the evidence is offered. The goal of this article is to identify, categorize, and analyze the various ways custom and usage are used by litigants and managed by judges. By clearly identifying the various contexts in which custom and usage evidence is sought to be used by litigants, and in which it is admitted, excluded, or limited by the courts, it is possible to develop a principled analysis of when such evidence is necessary, appropriate, and inappropriate. This will assist counsel in evaluating when custom and usage evidence is essential, or desirable. In addition to addressing the substantive law of custom and usage, this article examines the procedural hurdles to admission of custom and usage evidence. It will also serve as a useful tool for explaining to prospective custom and usage witnesses their role in a case.

Number of Pages in PDF File: 83

Keywords: context, custom, custom and usage, Daubert, evidence, expert witness, gas balancing, merger, parol evidence rule, plain meaning rule, relevant, reliable, Restatement, royalty, surrounding circumstances, technical terms, UCC, Uniform Commercial Code, usage, trade usage, usage

Accepted Paper Series