Releasing Liability: What You Should Know Before Your Business Uses a Release of Liability

Some activities are inherently risky. Visitors of certain types of businesses such as ski resorts, gyms, and amusement parks know there is a chance they could get injured when they engage in the activities those businesses offer. To protect themselves against potentially costly lawsuits, businesses can use a liability waiver to shift the risk from themselves to their customers.

Liability waivers are a type of contractual provision in which one party agrees not to hold the other party legally responsible for a set of acknowledged risks. Businesses may ask customers to sign a liability waiver saying that they will not sue for damages if they are injured on the business owner’s premises. Courts have generally found liability waivers to be enforceable, but they are not a silver bullet. If you ask your customers to sign away their right to sue, you must draft a liability waiver that will stand up to scrutiny if tested.

When Is a Liability Waiver Appropriate?
Liability waivers are most commonly used by businesses that offer dangerous activities. “Dangerous” does not have to mean an extreme activity like skydiving, CrossFit, or martial arts, however.
● Most people would not consider getting a massage to be dangerous, but a massage therapist
might ask patients to sign a liability waiver in case they aggravate a prior injury when providing treatment.
● Liability waivers may be used if just one part of an activity—or one part of a property—presents risks. A sightseeing tour offered by a tourism company might not be considered very dangerous, but traveling by car or bus to the tour destination carries a risk of injury, so the tourism company might ask guests to sign a liability waiver. Similarly, a homeowners’ association might have a liability waiver pertaining to their recreational facilities, such as pools and workout centers.
● Businesses may require contractors to sign a waiver prior to working on their property.
● Liability waivers can be used in unusual or one-off circumstances that present a risk of injury or illness; for example, during the COVID 19 pandemic, businesses introduced liability waivers in an attempt to preclude lawsuits from people who became ill from contracting the virus at the business’s site. 1

There is no definitive list of circumstances in which businesses should or should not use a liability waiver.

For practical reasons, not all businesses ask customers to sign liability waivers. Grocery store patrons, for example, could slip and fall on a wet spot and sue the store for their injuries, but they are not asked to
sign waivers before shopping. The risk of a slip-and-fall accident is low, and it would require a lot of time and resources to get every shopper to sign a release. It is more practical for grocery stores to clean up spills and use “wet floor” signs when appropriate to mitigate their liability.

1 Suzanne Barlyn and John McCrank, Sign Here First: Reopening Businesses Turn to Liability Waivers, Disclaimers, Insurance J. (June 1, 2020), https://www.insurancejournal.com/news/national/2020/06/01/570571.htm.

On the other hand, if the grocery store has a play area for children to use while their parents shop, the store might ask parents to sign a waiver releasing the store from liability for injuries suffered while using the play area. In fact, this is what BJ’s Wholesale Club did, and the waiver ended up protecting BJ’s from a lawsuit. 2

Liability waivers are typically not used in an employment context to protect the business against claims arising from work-related injuries. This is because employees cannot sue their employers for injuries, except in very rare cases. Instead, they are compensated by the business’s workers’ compensation insurance. An employer could ask an employee to sign a release that is not related to injury claims, however, such as a release barring legal claims over separation or termination of employment.

Are Liability Waivers Legally Enforceable?
The enforceability of liability waivers is generally a state law matter, and states vary widely in their stance towards these provisions. Some states, including Louisiana and Virginia, consider waivers of liability for physical injury to be unenforceable. Other states have a freedom-of-contract stance and allow liability waivers if they meet a few basic requirements.

To be legally enforceable in states where they may be used, a waiver should meet the following criteria:

● The waiver must be clear and unambiguous. This means that the waiver must clearly specify the types of activities and legal claims it applies to. The waiver should not be overly broad to avoid confusion about its terms. It should also avoid legalese in favor of terms easily understandable by the average person. The customer should be able to understand what they are signing and that they are waiving their rights.
● The waiver should be conspicuous. This means that the liability waiver should be a separate document and should not be buried within a registration form or document that also addresses other matters.
● The waiver should not include intentional, reckless, or grossly negligent conduct. Waivers are designed to provide a liability shield against ordinary negligence (i.e., unintentional conduct or
oversight). They are not a get-out-of-jail-free card for companies to engage in wanton irresponsibility. So, while a waiver might protect a company offering hazardous activities against an accidental injury, if the company offers those activities without providing any safety equipment or procedures, a waiver likely would not protect them against claims arising from customers’ injuries that could have been avoided by taking those reasonable precautions.
● The waiver cannot violate state laws or public policy. Not only must liability waivers comply with the law in the state where they are drafted, they also must not violate public policy. For example, a waiver may be determined to be against public policy if one party has substantially less bargaining power, so that the contract puts them at the mercy of the other party’s negligence
● The waiver should comply with basic contract law principles. Each state has developed a body of case law applicable to liability waivers. In addition to these state-specific rules, basic contract law principles apply to waivers. The business seeking to enforce the waiver must obtain a signature from a customer who has the capacity to enter into the contract and provide sufficient consideration (i.e., something of value). Note that many states will not enforce a liability release signed by a parent on behalf of their minor children, who lack contractual capacity (in contrast to the ruling in favor of BJ’s Wholesale Club mentioned above).

2 BJ’s Wholesale Club Inc. v. Rosen, 435 Md. 714, 80 A.3d 345 (2013), https://caselaw.findlaw.com/court/md-court-
of-appeals/1651246.html

In summary, a liability waiver should be as detailed and as clear as possible. It should describe the activity the customer will engage in and its location, list the possible risks and injuries that could arise from that activity, and release the business from negligence to the full extent of the law, without creating a blanket shield against grossly negligent conduct. The names and addresses of the parties must be included, and the waiver must be presented to each individual customer for their signature, as a release that purports to waive liability on behalf of a group is not likely to be enforceable. Above all, have an attorney review the waiver of liability to ensure it complies with applicable state laws and will pass muster if tested in court.

Are You Doing Everything Possible to Protect Your Business?
The decision to have customers sign a liability waiver is usually industry-dependent; but new risks are constantly emerging, and companies must always be prepared to update their mitigation strategy. Although a liability waiver is not a guarantee against all liability, when well-written, it can be an important part of a company’s risk management strategy. One-size-fits-all online documents that are not tailored to your unique business activities and jurisdiction’s laws could fail a court challenge. For help creating a customized liability waiver designed specifically for your business, contact our office to schedule an appointment.

Disclaimer:
The information provided on this blog is for general informational purposes only and should not be construed as legal advice. Viewing or using any content on this blog does not establish an attorney-client relationship. The content may not reflect the most current legal developments, verdicts, or settlements, and should not be considered a substitute for legal advice from a qualified attorney licensed in your jurisdiction.

Contact Us:
For personalized legal guidance tailored to your specific situation, please contact Lineage Legal, LLC today. We are available via:
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Amber Gonska
Attorney at Law, Lineage Legal, LLC
262-686-1687 | www.lineagelegal.com