Blog post by Mark W. Siler
A client recently approached me about reviewing and revising the liability waiver form he has patrons of his business sign prior to their entry to his business premises. While the legal issues involved in reviewing a liability waiver (also known as an “exculpatory agreement”) are not new – the Wisconsin courts haven’t decided a case on the topic since 2005 – they are some of the most misunderstood issues and generate a great number of questions from clients.
Business owners whose operations necessarily lend themselves to the possibility of injuries to patrons, such as ski hills and health clubs, generally seek advice regarding exculpatory agreements they can use to protect their businesses. My client made a request similar to the one made by these business owners, that was: draft an exculpatory agreement that is “air-tight.”
For me as an attorney working in Wisconsin this request creates a problem. This is because the Wisconsin Supreme Court has considered exculpatory agreements six times in the last 25 years and held the agreement in question unenforceable each time. What does this mean for business owners in Wisconsin? There are two answers to this question.
First, it means business owners must seek the help of a lawyer in drafting any exculpatory agreement. While Wisconsin courts have not set forth an easy test that can guide you in drafting such agreements, certain steps can be taken to increase the likelihood that a court will find an exculpatory agreement enforceable – generally avoiding mistakes made in the cases where the Wisconsin Supreme Court has held the agreements unenforceable. One mistake is not separating the liability waiver terms from other parts of the agreement such as registration or indemnity provisions. According to the courts, this combination of agreements may prevent patrons from understanding the gravity of what it is they are waiving. Another error includes having someone sign a document that causes her to assume liability for any injury no matter the cause. Such language is overly broad and even includes reckless or intentional acts which can never be waived. Finally, some agreements are too vague or don’t define terms that necessarily need to be defined. These agreements will fail because the patron does not know what he is actually waiving.
Second, it means business owners should not be depending on an exculpatory agreement to shield their businesses from all liabilities. Owners should make sure they are operating their businesses in a manner that cuts down on the possibility of needing such a waiver. Obviously, there are businesses that are unable to avoid the risk of patron injuries because they allow people to partake in high risk activities (i.e. skiing), but there are still steps that can be taken to protect these businesses. First, search out a good insurance agent. I wrote an earlier article for Magazine SoHo regarding business insurance which could be helpful in this area. Further, if you meet with several insurance agents and no one will insure your operation, it is a sign that your business may expose you to losses that you will be unable to afford. Another step to take is to consider your staffing very carefully. If there are jobs in your organization whose activities may directly expose a patron to more risk, you will want to consider very carefully the people you put in that position taking into account that intentional and reckless behavior can’t be waived by the patron. Careful staffing can go a long way to preventing unnecessary risks.
Overall, an exculpatory agreement may be helpful for your business, but you should not make the common mistake of believing that it will protect you from all liability. Instead make sure you are properly insured and that your employees are not creating any unnecessary hazards.