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Vol. 70, No. 11, November
1997
Enforceable Exculpatory Agreements
Minors and exculpatory agreements
Every parent has been asked to sign releases so his or her child can
participate in outings, events or activities. Are such exculpatory agreements
enforceable? Because several parties can have claims arising out of a child's
injury, the question raises several issues. Specifically:
- May a parent, by signing a release prior to an event, release the personal
injury claims his or her minor child may have later?
- Does a minor have the capacity to enter into an enforceable exculpatory
agreement?
- May a parent enter into an enforceable exculpatory agreement that releases
the claims the parent would have relating to a minor child's death or injury?
Currently, Wisconsin statutory and case law does not yet directly address
the above issues. As to the first issue, plaintiffs' counsel could argue
that because section 807.01 of the Wisconsin Statutes provides that following
an accident a parent may not release a child's personal injury claim without
court approval, a parent may not release a child's personal injury claim
before an accident. On the other hand, the supreme court has said absent
a statutory prohibition of an exculpatory agreement, it will determine the
enforceability of such agreements on public policy grounds. The supreme
court may decide that the value of recreational activities for minors, when
weighed against the social ills that can arise if there is a shortage of
such activities, tips the scales in favor of enforcing such releases. 24
As to whether a minor has the capacity to enter into an enforceable exculpatory
agreement, plaintiffs' counsel would argue that even if a minor signed a
release, such would be voidable because, generally, a minor's contracts
for nonnecessities are voidable at the minor's option. 25
The majority of decisions from other jurisdictions have held that exculpatory
agreements relating to minors generally are not enforceable. 26
The problem created by this situation - a lack of adults willing to be volunteers
for youth activities out of fear of liability - has not gone unnoticed.
Recently, Congress passed and the President signed the Volunteer
Protection Act of 1997, 27 which provides
some protection to volunteers and agencies that provide activities for minors.
As to the third issue, the court of appeals indirectly addressed it in
Yauger, and found that the father therein could release his own claims
(for the deceased child's medical bills, funeral expenses and the father's
loss of consortium claim) and his wife's loss of consortium claim. 28 The supreme court, however, reversed on other grounds
and did not directly address the issue. 29
The supreme court's Yauger decision appears to assume, however, that
such claims theoretically could be released, if the form used is correctly
drafted.
Common sense advice to clients
The first thing attorneys should tell clients who want to rely upon exculpatory
agreements is "don't bet the farm" on the enforceability of any
exculpatory agreement. This area of the law
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Alexander (Sandie) Pendleton is a trial lawyer and shareholder with
Cook & Franke S.C., Milwaukee. He handles recreational injury and exculpatory
agreement cases, among others.
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is still evolving, and the track record before the supreme court for parties
seeking to rely on releases has been dismal. Advise clients that they still
should exercise reasonable care, even if participants sign exculpatory agreements.
Expressly advise clients that the enforcement of such agreements is disfavored,
and that it is impossible to draft an enforceable exculpatory agreement
that bars absolutely all claims. Finally, advise clients to obtain insurance
that covers the organization or event that also covers officers and directors.
If no insurance company will touch the organization or event, they either
should get into a new line of business or forgo the event. Officers and
directors should be aware that if there is no insurance, and the organization
obviously is undercapitalized for the foreseeable liabilities it is incurring,
officers and directors may be held personally liable.
Conclusion
The supreme court has reaffirmed several times that it does not consider
all exculpatory agreements void as a matter of law. Yet its decisions as
a whole, especially its most recent decisions, indicate that the court will
only grudgingly find such agreements enforceable. The court has set the
standard quite high, and attorneys and their clients must act accordingly
if they want to create an enforceable exculpatory agreement.
Endnotes
1 Merten v. Nathan, 108 Wis. 2d 205,
210, 321 N.W.2d 173, 176 (1982).
2 Richards v. Richards, 181 Wis. 2d
1007, 1016, 513 N.W.2d 113, 121-22 (1994); see also Merten,
108 Wis. 2d at 212, 321 N.W.2d at 177 (1982).
3 Arnold v. Shawano County Agric. Soc'y,
111 Wis. 2d 203, 209, 330 N.W.2d 773, 777 (1983).
4 Yauger v.
Skiing Enter. Inc., 206 Wis. 2d 75, 80, 557 N.W.2d 60, 62 (1996).
5 Merten, 108 Wis. 2d at 211, 321 N.W.2d
at 176.
6 Id.
7 Arnold, 111 Wis. 2d at 210-11, 330
N.W.2d at 777; Dobratz v. Thomson, 161 Wis. 2d 502, 515, 468 N.W.2d
654, 658-9 (1991); see generally Restatement (Second) of Contracts,
§ 195 (1979).
8 Merten, 108 Wis. 2d 205, 321 N.W.2d
173 (1982).
9 Arnold, 111 Wis. 2d 203, 330 N.W.2d
773 (1983). A portion of the supreme court's Arnold decision was
withdrawn in a subsequent decision, but the portion of the Arnold
decision relating to exculpatory contracts remains good law and is cited
frequently. See Green Spring Farm v. Kersten, 136 Wis. 2d 304, 317,
401 N.W.2d 816 (1987); Yauger, 206 Wis. 2d at 80, 557 N.W.2d at 62.
10 Dobratz, 161 Wis. 2d 502, 468 N.W.2d
654 (1991).
11 Id. at 522, 468 N.W.2d at 661-62
(bracketed material in original text).
12 Richards, 181 Wis. 2d 1007, 513
N.W.2d 118 (1994).
13 Id. at 1011, 513 N.W.2d at 119.
14 Yauger, 206 Wis. 2d 75, 557 N.W.2d
60 (1996), rev'g, 196 Wis. 2d 485, 538 N.W.2d 834 (Ct. App. 1995).
15 Id. at 78, 557 N.W.2d at 61.
16 Id. at 77, 557 N.W.2d at 61.
17 Id. at 86 n.2, 557 N.W.2d at 64.
18 Id. at 85, 557 N.W.2d at 64.
19 Trainor, 147 Wis. 2d 107, 432 N.W.2d626
(Ct. App. 1988), pet. for rev. den. 147 Wis. 2d 889, 436 N.W.2d 30
(1988).
20 Id. at 117, 432 N.W.2d at 630.
21 See Richards, 181 Wis. 2d at 1019,
513 N.W.2d at 123. The supreme court's Yauger decision gives only
the briefest of mention to the issue of negotiation/bargaining. Yauger,
206 Wis. 2d at 86 n.1, 557 N.W.2d at 64. This may suggest that bargaining/negotiation
remains an unrealistic factor for at least some of the justices.
22 Richards, 181 Wis. 2d at 1019,
513 N.W.2d at 123; see also Restatement (Second) of Contracts, §
195 cmt. a ("The rigor of this rule [disfavoring exculpatory agreements]
may be mitigated by a fairly bargained for agreement to limit liability
to a reasonable agreed value in return for a lower rate.").
23 Richards at 1019, 513 N.W.2d at
123.
24 See Joseph H. King Jr., Exculpatory
Agreements for Volunteers in Youth Activities - The Alternative to "Nerf®"
Tiddlywinks, 53 Ohio St. L.J. 683, 684 (1992).
25 Halbam v. Lemke, 99 Wis. 2d 241,
198 N.W.2d 562 (1980)(minor's contracts for nonnecessities are voidable
at the minor's option).
26 See, King supra note 24,
at 684 (noting that a majority of courts have held that minors lack the
capacity to enter into enforceable exculpatory agreements, and that parents
may not enter into enforceable agreements on their minor children's behalf).
27 The
Volunteer Protection Act of 1997, Public Law 105-119, June 18, 1997,
111 Stat. 218, 42 U.S.C. §§ 14501-14505.
28 Yauger, 196 Wis. 2d at 503, 538
N.W.2d at 841; see also Korth by Lukas v. Amer. Fam. Ins.,
115 Wis. 2d 326, 330, 340 N.W.2d 494 (1983)(noting distinction between minor's
claims and parents' independent claims for parental loss of consortium and
for the minor's medical bills).
29 Yauger at 88 n.3, 557 N.W.2d at
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