or simply a statement posted in a prominent location, in which one of two things is stipulated:

An exculpatory agreement is usually a provision contained in a contract between a service provider and a participant, relieving the service provider from any liability

resulting from loss or damage sustained by the participant. The terms “waiver” and “release of liability” are usually used interchangeably. An example of an

exculpatory clause is a dry cleaner’s receipt that includes a disclaimer purportedly relieving the dry cleaner from any liability for damage to the clothing during the dry-

cleaning process, or a waiver agreement that is signed by a participant in a particular recreational activity or event. Disclaimers can appear as warning signs posted on

playgrounds, sports arenas, constructions sites or other areas involving risk of physical injury (“enter at your own risk” or “use at your own risk”). It is common to see

signs like the following in places of business: “Park at your own risk!”; “Swim at your own risk!”; “Enter at your own risk!”; or “The occupier is not liable for any item

damaged or stolen from this property however caused!” They can appear as part of the packaging or advertising for consumer products. They can also be found as a

An exculpatory clause and/or liability waiver is not always effective. Society and the law attempt to balance a person’s right to recover damages for the negligence of

another and the ability of a business to conduct an activity that carries with it an amount of risk without being subjected to lawsuits every time somebody is hurt, or

property is lost or damaged. Such an agreement may be invalidated by courts if it is found to be unreasonable in any way. Exculpatory agreements come in all shapes,

sizes, and types. They include liability waivers, releases of liability, assumption of risk agreements, pre-injury releases, disclaimers of liability, sign postings, etc. Most

people are unaware of what rights, if any, they are giving up or waiving, when they sign such exculpatory agreements. For many years, many professionals labored

under the misconception that waivers are not worth the paper they are written on. Over time, this erroneous notion was replaced by the equally-erroneous belief that

waivers can offer total liability protection for all facility and service providers under all circumstances. Neither belief is correct. Insurance and subrogation professionals

must become familiar with the legal and binding effect of such exculpatory agreements to evaluate liability claims and subrogation potential. It is the purpose of this

fast rule that demanded reasonable care from contracting parties regardless of any contractual limitation of negligence or liability. In The Syracuse, 79 U.S. 167 (1870),

the Supreme Court ruled that an exculpatory clause contained in a contract for towing a canal boat from Albany to New York City, which stated that the boat was being

towed “at the risk of her master and owner,” was unenforceable and could not eliminate the tug master’s duty of reasonable care. It held that the exculpatory

language in the contract was ineffective because the damage to the canal boat was the result of negligence. As a result, the tug company was liable for the damage

notwithstanding the contractual limitations.

The period from 1897 to 1937 became known as the “Lochner Era.” This was a period during which the U.S. Supreme Court routinely struck down economic regulations

adopted by individual states, using due process and infringement on individual contract rights arguments, based on the Court’s own notions of the most appropriate

means for the State to implement its intra-state policies. The era takes its name from the 1905 Supreme Court decision of Lochner v. New York. Even during the

Lochner Era and its increased emphasis on freedom of contract, the Court held accountability for negligent actions to an even higher priority than freedom of contract.

It felt that even though the freedom to contract is held in high regard, courts will nullify exculpatory agreements if they perceive significant unfairness, unequal

among themselves in any manner they felt appropriate. Despite a continued disfavor of exculpatory clauses, the courts began to discount concerns over the bargaining

process and public policy vigilance and instead, began to favor strict construction. Today, courts construing exculpatory clauses do so using two important safeguards:

From there, the states have each developed their own case decisions and legislation about the enforcement of exculpatory provisions in contracts. Some states, such

v. Swimwest Family Fitness Center, 691 N.W.2d 334 (Wis. 2005), the Wisconsin Supreme Court held that a guest registration and waiver form signed by a woman who

drowned in a lap pool was an invalid exculpatory provision and against public policy, because it was overly broad and all-inclusive. The Court held that (1) the term

“fault” did not make clear that the guest was releasing others from intentional, as well as negligent, acts, (2) the form served two purposes - guest registration and

waiver of liability for “fault”, and (3) the guest did not have the opportunity to bargain - she either signed or she couldn’t swim. Other states invalidate them if they are

courts have identified six criteria established to identify the kind of agreement in which an exculpatory clause is invalid as contrary to public policy:

In many states, to be enforceable, waivers need to be narrowly and clearly drafted to fully notify the parties of the significance of the document and inform them as to

the specific nature of what is being waived. In some jurisdictions, the waiver must be a separate document with its own signature line, should not use excessive legal

jargon, and should discuss only the risks associated with the activity and the release from liability due to negligence. Some states even require that the party waiving

rights must be provided with an opportunity to bargain over the terms of the waiver. The text of the waiver itself should provide for the opportunity to bargain or at a

conscience are not implicated. Hanks v. Powder Ridge Restaurant Corp., et al., 885 A.2d 734 (Conn. 2005). In addition, some state statutes affect the viability of an

release signed by a decedent with the express purpose of barring his potential heirs from instituting a wrongful death action in the event of his death was void as

against public policy because of its Wrongful Death Act.

As stated above, exculpatory agreements come in all shapes, sizes, and types.

liability against the provider for any fault or liability for injuries resulting from the ordinary negligence of the provider, its employees, or its agents. The agreement

attempts to relieve the service provider of liability for injuries resulting from mistakes, errors or faults of the provider and, in effect, relieves the provider of the duty to

hazards that caused injury or damages. It alleges that the risks assumed are not those created by the defendant’s negligence, but rather by the nature of the activity

An individual can assume the risks involved in an activity in one of two ways: (1) expressly, by signing an agreement, or (2) by his conduct. Express assumption of

risk involves a written agreement in which an individual acknowledges the risk of injury or other damages and agrees to assume those risks. A “Waiver of Liability”

usually includes language that the participant understands the risks inherent in certain activities and that participation in such activities could result in injury. The

participant usually acknowledges that the risks and dangers may be caused by the negligence of the staff of the business, accidents, breaches of contract, or other

causes, and that the participant assumes all risks and dangers, including the responsibility for any losses or damages, whether caused in whole or in part by the

negligence or conduct of service provider. To prevail on an assumption of risk affirmative defense, the defendant must show the court that the plaintiff knew there

was a risk of injury or other harm, and knowingly engaged in the activity which resulted in his injury or damages anyway.

jurisdiction.” 30 Am. Jur. Proof of Facts 3d 161 § 3. What courts consider to be a “valid release”, however, varies from state to state. A properly worded pre-injury

require that for a pre-injury release to be effective, it must (a) meet the fair notice requirements, (b) constitute a meeting of the minds, and (c) be supported by valid

consideration. Dresser Indus., Inc. v. Page Petroleum, Inc., 853 S.W.2d 505 (Tex. 1993).

a promise to reimburse another for such a loss and to give security against such a loss. It is a promise to do something in the future, should injury or damage result

liability arising from a transaction or activity. Black’s Law Dictionary says that to “hold harmless” and to “indemnify” have the same meaning whereas Mellinkoff’s

Dictionary of American Legal Usage says that one can also distinguish the two terms - that “hold harmless is understood to protect another against the risk of loss as

well as actual loss” whereas indemnify can also mean “reimburse for any damage,” a narrower meaning than that of hold harmless. Technically, the former is

defensive, while the latter is offensive. The participant agrees to “hold harmless” (i.e., indemnify) a service provider even before any injury or damage is sustained. A

“hold harmless” agreement protects against losses and liabilities, while an indemnity agreement protects against losses alone. Indemnity agreements are much

recognized relationship (such as host/visitor, manufacturer/consumer, etc.). The disclaimer usually attempts to relieve a party of liability in situations involving risk or

Signs which purport to limit liability for injuries or accidents simply because they are posted are found everywhere. Some signs serve a legitimate function, such as

notifying people of “hidden” hazards such as wet floors, steps, or uneven surfaces. That’s why every time there is a spill in a store, out comes the “wet floor” sign.

While “wet floor” signs may fulfill a duty to warn others, other signs attempt to limit liability. A sign which reads “Not Responsible for Stolen Vehicles” is attempting to

shirk a duty a valet service owes to its customers to safeguard and protect items left in their care and custody.

person or property which may occur from any cause whatsoever during the event or service provided.

tickets to a basketball game, amusement park, concert, etc. Exculpatory clauses are often found on the back of a ticket or a receipt that you have not signed. The

theory is that the act of purchasing the ticket is all that is needed for an agreement to form between the parties in which one promises not to sue the other in the

event of an injury. Disclaimers can often be seen where information, products, or services are supplied. The disclaimer and other terms and conditions should be

“assumes the inherent risks of skiing” does not clearly and unambiguously release the operator from liability for the operator’s negligence. Steele v. Mt. Hood

Meadows Oregon, Ltd., 974 P.2d. 794 (Or. Ct. App. 1999). They are frequently held to the same standards as waivers and exculpatory clauses found in written and

1996). Other states make their ultimate determination on the effectiveness of such “agreements” based on what constitutes the public interest after considering the

totality of the circumstances of any given case. Wolf v. Ford, 644 A.2d 522 (Md. App. 1994).

in accessing an online service (e.g., in connection with a purchase or an online service) or as part of the installation of a piece of software. The term “shrink-wrap”

comes from the packaging method of computer installation disks and associated documentation sealed by shrink-wrap cellophane. The purported end user license

agreement was often itself packaged in shrink-wrap cellophane and placed on the outside of the package or included as the top item in the package. Shrink-wrap

agreements can take a variety of forms and are found in both software and hardware acquisitions. However, they all have a common structure: essentially non-

negotiable terms and conditions that accompany the product. The terms are often used interchangeably. Although this article doesn’t deal with these types of

agreements, courts have tended to uphold as enforceable “shrink-wrap” and “click-wrap” agreements, even if the consumer fails to read them. The terms and

conditions found in shrink-wrap and click-wrap agreements vary greatly, but include such terms as warranty terms, licensing use restrictions, limitations on liability,

hardware component. They may even be found, with some searching, in a file entitled “license.txt” or similar name on the installation CD on which a new piece of

software is delivered. Businesses seldom read these terms in any detail, generally view them as non-negotiable, and accept them as a necessary evil.

Cohen v. Five Brooks Stable, 72 Cal. Rptr.3d 471 (Cal. App. 2008). Some courts require that the word “negligence” be specifically included, and that the waiver explicitly

state the type of negligence being waived to distinguish between losses resulting from inherent risks and those resulting from fault or wrongdoing Slowe v. Pike Creek

Court Club, Inc., 2008 WL 5115035 (Del. Super. 2008).

waiver include language specifying the “negligence” of the provider. Failure to use the word “negligence” in those states causes an otherwise enforceable waiver to

fail.

Most states will not enforce waivers intended to protect the provider against liability for gross negligence, reckless conduct, willful/wanton conduct, or intentional

acts. Ordinary negligence is the failure to take the prudence and care that a reasonable, prudent professional would take under the circumstances. Gross negligence is

an extreme form of negligence in which the party fails to take the care that even a careless person would take under the circumstances. It is sometimes said that gross

negligence includes a reckless disregard for the rights and welfare of others.

In some states a waiver signed by a spouse protects the provider from litigation by the non-signing spouse in the event of injury or death of the signing spouse. In other

states, such a waiver has no effect on the right of the non-signing spouse to bring suit.

person or property of another, or for their willful or negligent violation of the law.” Montana Code Ann. § 28-2-702.

requirements and is hard to classify.

Whether the same public policy concerns and applications which govern the efficacy of exculpatory clauses involving personal injury claims applies equally to the

release of business losses in a contract between two commercial entities is also an area that varies from state to state. Although there is often a correlation between

the two, the subject of exculpatory agreements between two commercial entities is not covered in the chart below. As an example of its treatment, however, in

Discount Fabric House v. Wisconsin Telephone, Inc., 345 N.W.2d 417 (Wis. 1984), the plaintiff, a drapery business, sued the Wisconsin Telephone Company for omitting

the plaintiff’s trade name from an advertisement in the Yellow Pages. The court noted that the nature of the telephone company’s business gave it a “decisive

advantage of bargaining strength.” Therefore, the exculpatory clause was held invalid.

dog. At the same time, it may allow the dog owner to argue that the person assumed the risk of a dangerous dog after reading the sign. A “Caution: Wet Floor” sign

may serve as notice to invitees and social guests of a hazardous condition. However, they open a new area of litigation regarding their visibility and specificity. A

garbage, any inanimate object or objects, or any similar material that could fall or blow from such vehicle, to prevent such materials from falling, blowing, or in any way

escaping from such vehicle. No sign will erase the legal duty which the statute creates. A sign in a hotel lobby that states “This hotel is not responsible for any stolen or

Drafters of exculpatory agreements are not always given clear guidance as to what is and what isn’t acceptable. The Wisconsin Supreme Court has now considered

exculpatory agreements in six cases in the past 25 years, and each time has found the agreement as drafted to be unenforceable. It isn’t so much that lawyers and

businesses that draft such agreements are ignoring what the Court is telling them, as much as it is that the Supreme Court has not formulated a clear, uniform test for

requires engaging qualified counsel. The following chart provides a brief and general summary of how exculpatory clauses are treated in all 50 states. Exculpatory