June 19, 2013 – Waivers of liability are a fact of life. You or your clients sign their kids up for swimming or tennis lessons or some sort of parks and recreation activity, and are invariably confronted with a “waiver of liability” form, releasing the particular organization from liability from any injury sustained during the activity.
Additionally, boat or snowmobile rental agreements incorporate waiver of liability provisions in favor of the business supplying the boat or snowmobile.
The point is: there are many businesses that provide products and services to the public, on the premise that by having their customer execute a waiver of liability, the businesses are limiting their exposure for liability and attendant damages. But are they?
Litigation in Wisconsin
Most waiver of liability provisions (at least the ones this author has read) are incredibly broad and all-inclusive. If these waivers are enforced literally, the business would never have any liability for the particular activity. Over the last several years, there has been significant litigation in Wisconsin concerning the enforceability of liability waivers.
In 2005, the Wisconsin Supreme Court observed: “Indeed, each exculpatory contract (i.e., waiver of liability) that this court has looked at in the past 25 years has been held unenforceable.”1 Throughout this last 25-year period, the courts have repeatedly said that waivers of liability clauses are and will continue to be looked at with disfavor.
Timothy Fenner (U.W. Law School, 1972) is a partner in the Madison office of Axley Brynelson LLP. Fenner is chair of the firm’s Business Practice Group and provides transactional counseling to clients in many areas of law.
Waivers of liability (i.e., an exculpatory clause) are not invalid per se. But provisions of any such waiver are closely scrutinized and strictly construed against the party seeking to rely on it.
Recently, the Wisconsin Court of Appeals issued a decision in Brooten v. Hoist Fitness Systems, Inc., et al., 2012AP1940. In that case, an individual was injured at a fitness center when a weight bench he was using failed. The bench collapsed because a component had not been properly installed, and the supporting bolts had not been tightened. The injured person brought a common-law negligence, safe place and strict liability claim against the fitness center.
The fitness center required every one of its customers to sign a waiver form before they were permitted to use the facility and the equipment. The waiver was very comprehensive. The customer acknowledged inherent risks and dangers associated with the fitness activities, that the activities could result in personal injury, and that the customer assumed such risks, but nevertheless desired to participate in the fitness activities. The customer agreed to release, waive and discharge – as well as hold harmless, defend and indemnify – the fitness center from any claims, actions or losses for bodily injury which may arise out of the customer’s use of any equipment or participation in these activities.
The question before the appeals was whether or not the waiver was enforceable. The appeals court held that it was not.
Generally, exculpatory clauses have been analyzed on principles of contract law and on public policy grounds. However, the contractual analysis has been deemphasized – waivers are generally reviewed on the basis of whether or not it is contrary to public policy. In the case before it, the appeals court concluded that the fitness center’s liability waiver was contrary to public policy and, therefore, void and unenforceable.
In reaching this conclusion, the court noted the following:
The waiver was presented to the customer on a take-it-or-leave-it basis. The law in Wisconsin is that the form itself must provide an opportunity to the customer to “bargain.” The absence of an opportunity to bargain in regard to the term of an exculpatory clause is a significant factor suggesting a violation of public policy.
The waiver was impermissibly broad and all-inclusive. It is well-settled law that an exculpatory clause can only release claims of “negligence.” It cannot, under any circumstances, bargained for or not, preclude claims based upon “reckless or intentional conduct.” The waiver before the court was broad and applied to causes of action “…caused by negligence or any other clause.” This would suggest a release for claims based upon reckless or intentional conduct. Further, the release required the customer to both “defend and indemnify” the fitness center. This went beyond just simply a mere release.
Finally, the court indicated that the waiver was unenforceable because it exceeded the contemplation of the parties. The court specifically indicated: “We are satisfied that an ordinary consumer would not contemplate that “defend and indemnify” language buried in the middle of a form’s text would require him or her to provide a legal defense for (the fitness center) and to pay (the fitness center’s) share of damages in the event a third party sued (the fitness center).
For the foregoing reasons, the waiver was held unenforceable.
For those businesses that use waiver of liability forms, it is essential that the form be appropriately drafted. With respect to drafting, the only advice I could give is that “less is more.” Businesses should not try to make liability waiver forms all-inclusive, covering everything and anything under the sun.
By doing so, the business runs into the trap of being overbroad. The focus should be on negligence and negligence alone. Further, do you really need to have an “indemnity” and a “defend” clause in the waiver? Isn’t the release of liability sufficient?
Finally, with the requirement that there be an opportunity for “bargaining,” lawyers must be creative and develop some sort of bargaining proposal or format. For example, if a business is renting an all-terrain vehicle, the business could charge one rate if the waiver is signed and another rate (presumably significantly higher) if a waiver was not signed. The customer would be given the opportunity to choose and, therefore, perhaps “bargain” as contemplated in the court decisions.
The bottom line is that waivers of liability are incredibly difficult to enforce. More often than not, courts declare them to be unenforceable. If you or your clients are going to be using such waivers, it is essential that your waivers be drafted in a manner that will at least facially comply with the requirements established by Wisconsin courts.
This article is republished with permission from Axley Brynelson LLP.
1 Rainbow Country Rentals and Retail, Inc. v. Ameritech Publishing, Inc., 2005 WI 153, ¶ 35, 286 Wis. 2d 170, 192, 706 N.W.2d 95, 104.