California Businesses: Yes, You Can Limit the Right to Sue
Generally speaking, business contracts serve two purposes – one, to effectuate your deal and, two, to limit your risks and legal liability as much as possible. One of the best ways to limit your legal liability is to obtain from the other party a waiver of the right to sue. Will California courts enforce San Diego business contract clauses that limit the right to sue? Yes, depending on the circumstances. This article discusses exculpatory clauses with respect to risky active sport-type circumstances.
San Diego Exculpatory Clauses: General Legal Principles
In general, under California law, people owe a general duty of care to others not to act so as to injure them. See Cal. Civ. Code, § 1714.
However, there is an exception to that rule in the context of “active” sports or recreational activities. See, Knight v. Jewett, 3 Cal.4th 296, 834 P.2d 696 (Cal. Supreme Court 1992). In Knight, the plaintiff was accidentally injured in a touch football game when another player knocked her down and stepped on her hand. The California Supreme Court held that there was no liability because the other player owed the plaintiff no duty of care not to injure her in the regular course of play. Since the Knight case was decided, the rule has been applied to other activities including:
- Bumper cars and amusement parks
- Non-contact sports such as golf
- Off-roading with a motorcycle or dune buggy
- Figure ice skating
- Long-distance group bicycle riding
- Water sports and water skiing
By contrast, the rule is not applied when a driver of a regular boat takes passengers out for a “ride around a lake” and one of the passengers is injured. See Shannon v. Rhodes, 92 Cal.App.4th 792, 801 (Cal. App. 2001). Note that Shannon did not involve a contractual waiver and release.
San Diego Exculpatory Clauses: Obtaining a Release and Waiver
The “no-duty-of-care” rule with respect to outdoor, recreational, and active sports is “stand alone” in the sense that it can be enforced without any additional contracts or agreement between your San Diego active sport business and your paying customers. However, if you obtain a Release of Liability and Waiver in advance, then you have created an exceedingly strong legal defense if you are sued
The following release and waiver was discussed with approval in the case of Allan v. Snow Summit, Inc., 51 Cal. App. 4th 1358 (Cal. App. 4th Dist. 1996):
AGREEMENT AND RELEASE OF LIABILITY
“I, _________________ [Customer], have voluntarily enrolled in a ski lesson offered by Snow Summit, Inc. I am aware that my participation in the ski lesson and THE SPORT OF SKIING INVOLVES NUMEROUS RISKS OF INJURY, including, but not limited to, falls, loss of control, collisions with other skiers and natural and man-made objects and I FREELY ASSUME THOSE RISKS.
“As lawful consideration for being permitted to enroll in the ski lesson, I AGREE TO RELEASE FROM ANY LEGAL LIABILITY AND AGREE NOT TO SUE SNOW SUMMIT, INC., their owners, officers, directors, members, agents and employees, for any and all injuries caused by or resulting from any participation in the ski lesson or the sport of skiing whether or not such injury or death was caused by alleged negligence.
“I AM AWARE THAT THIS CONTRACT IS LEGALLY BINDING AND THAT I AM RELEASING LEGAL RIGHTS BY SIGNING IT.
(bold font added). Many states follow the same rule particularly if a release and waiver is obtained. See, for example, Shumate v. Lycan, 675 NE 2d 749 (Indiana Court of Appeals 1997) (similar release with respect to horseback riding).
San Diego Exculpatory Clauses: Legal Advice Needed
Release and waivers are complex and demand the most exacting of legal attention. If you have been given a release and waiver to sign, it is important to have an experienced business attorney review the language and explain what the release and waiver means.
If, on the other hand, you want to include release and waiver language in your business contracts, then again, experienced legal counsel is needed. For courts to enforce waiver clauses, the waiver language must be precise and case law dictates the importance of font size, bolding, and other aspects of the text. Release and waiver clauses in business contracts should be examined closely by a good business lawyer.
Contact San Diego Corporation Law Today
If you would like more information about exculpatory clauses and other release and waiver clauses and contracts, contact attorney Michael Leonard, Esq., of San Diego Corporate Law. Mr. Leonard can be reached at (858) 483-9200 or via email.