Monday, November 30, 2020

They Promised Not to Sue Us! Working With the Legal Limitations of Liability Waivers to Minimize Risk

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Many businesses require patrons to sign standard waivers of liability. But, can businesses expect those waivers to guarantee victory in a later lawsuit? Under Arizona law, the answer is a definite, and constitutional, “maybe.”

We all have seen such waivers of liability. Sometimes they appear in the “fine print” on the backs of invoices, receipts, parking stubs and tickets. Sometimes owners of activity-based business premises such as gyms, training facilities and horseback riding venues want signatures on waivers. Youth sports programs generally require parents to sign waivers. Operators of play lands, amusement parks, water parks, fairs and carnivals often seek waivers prior to allowing participation in rides and activities. Even fans at sporting events ranging from baseball through race car driving sometimes need to waive liability prior to attending certain events.

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So, how much protection from liability for injury do these waivers afford? The good news for business owners is that Arizona law allows parties to agree in an advance express waiver of liability which party will bear the risk of potential injury caused by the other party’s negligence. Because of a provision inserted into the Arizona Constitution when our state was founded, however, the question of whether such a waiver is enforceable is always a question of fact, solely reserved for the jury.

Essentially, the law treats a contractual waiver as an express assumption of the risk by the injured party. When a defending business raises an express assumption of risk defense, the jury weighs two factors to determine the validity of a waiver and release of liability: (1) whether it comports with public policy; and (2) whether the parties bargained for the limitation of liability. If a jury determines that an express assumption of risk is valid, it will bar recovery for the claimed injury. Arizona courts have established a few factors for determining when a waiver does not conflict with public policy. A defending business must demonstrate that: (1) there was no employment relationship between the injured person and the business; (2) there was no unequal bargaining power between the injured person and the business, such as where the injured person was required or compelled to participate; (3) there was no association with any public service duty that might have been owed to the injured person; and (4) the injured person was not a member of any class that is protected from the business.

Once the defending business has convinced the jury that no public policy stands in the way of enforcing the waiver, the jury must be persuaded that the parties bargained for the assumed risk. Specifically, the defending business must show that: (1) the injured person’s injury was caused by a risk specifically encompassed within the scope of the waiver; and (2) the injured person intentionally waived a known right when signing the document. The mere existence of the injured person’s signature on a pre-printed release does not by itself resolve the issue.

Practically speaking, this all means that a business choosing to enforce its waivers must be ready to take a case all the way to trial. Lawyers representing injured persons certainly will stand ready to attempt to defeat any waiver. In the end, what can a business then do to maximize the usefulness of a liability waiver and obtain a good result?

First, the waiver should be tailored specifically to the activity or business purpose at issue. Generic language in a release likely will not suffice, but an accurate and complete description of the activity and of the potential risks will support enforcement. Second, the waiver needs to document that the patron understood and accepted those potential risks of the activity or business purpose. The participating person’s agreement should be obvious on the face of the release. Third, any warning language in the waiver should repeat precisely any warnings posted at the business or included in any brochures. Consistency of the message to patrons can help demonstrate their prior knowledge of the potential risks. Fourth, all employees should be trained to follow procedures to obtain signed waivers before participation. Uniformity of application can help to obtain enforcement in certain circumstances.

Of course, maintaining the right insurance and seeking appropriate legal counsel can never be discounted in minimizing risk and maximizing the potential for acceptable outcomes in litigation. At the very least, the support of trained professionals can assist a business in transforming the definite “maybe” into a firm “yes” when seeking to enforce its waivers.


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