Release of Liability: A Balancing of Tort and Contract Law

People are frequently offered opportunities to participate in the latest trend, whether crossfit gyms, hot yoga studios, water powered jet packs, sensory deprivation tanks, and even speed dating. Along with the offer, however, is the usual requirement that they assume the risk of the activity and release the company from liability. The release is a contractual attempt to negate a party’s tort liability.

This article will define and describe the general release used in many of the recreational activities described above and explain and explore ways to avoid the release and assist you, in properly evaluating such agreements and the personal injury claims which implicate a release of liability.

UNDERSTANDING THE RELEASE

Its Purpose

Simply, a release of liability (sometimes called an exculpatory clause) purports to do what it says; the release relieves a party of a legal duty to another. (Jimenez v. 24 Hour Fitness USA, Inc. (2015) 237 Cal.App.4th 546, 554) (Jimenez). The typical release of liability one may be required to sign, before engaging in the above described activities, if often as straightforward as the following:

The participant releases and holds Company harmless from all costs, fees, damages, judgments, liabilities, injuries, physical or psychological, death, or personal or real property damage (“Claims”) arising out of or resulting from the participation in the [certain defined] Activity, whether or not such Claims were caused by the negligence or default of Company. (Emphasis added.)

(See examples of other releases in City of Santa Barbara v. Superior Court (2007) 41 Cal.4th 747, 751 (City of Santa Barbara); Jimenez, supra, 237 Cal.App.4th 456, 549-550; Eriksson v. Nunnink (2011) 191 Cal.App.4th 826, 854; Randas v. YMCA of Metropolitan Los Angeles (1993) 17 Cal.App.4th 158, 163 (Randas).) 

Its Parameters

As a general proposition, “. . .‘the law has looked carefully and with some skepticism at those who attempt to contract away their legal liability for the commission of torts.’ Courts and commentators have observed that such releases pose a conflict between contract and tort law. On the one hand is the freedom of individuals to agree to limit their future liability; balanced against that are public policies underlying our tort system: as a general matter, we seek to maintain or reinforce a reasonable standard of care in community life and require wrongdoers—not the community at large—to provide appropriate recompense to injured parties. [Citation omitted.]” (City of Santa Barbara, supra, 41 Cal.4th at p. 754.)

The California legislature has codified that careful skepticism in California Civil Code section 1668, which states: “All contracts which have for their object, directly or indirectly, to exempt any one from responsibility for his own fraud, or willful injury to the person or property of another, or violation of law, whether willful or negligent, are against the policy of the law.” Clearly, one cannot, by contract, be relieved from intentional acts (i.e., fraud or willful injury).

Even an attempt to release one from liability for some negligent acts may also be unenforceable as against the policy of the law. (Tunkl v. Regents of University of California (1963) 60 Cal.2d 92, 94-101 (Tunkl); City of Santa Barbara, supra, 41 Cal.4th at pp. 755-758.) In Tunkl, the California Supreme Court held that “an exculpatory clause which affects the public interest cannot stand.” (Emphasis added.) (Tunkl, supra, 60 Cal.2d at p. 98.) 

Notwithstanding the enforcement limitations for a release (i.e., the release cannot relieve liability for intentional acts or for acts which affect the public interest), “future . . . liability for ‘ordinary’ or ‘simple’ negligence generally may be released . . . .” (Emphasis added.) (City of Santa Barbara, supra, 41 Cal.4th at p. 758.) Such releases have been frequently upheld in the context of sports and recreation programs as these agreements, according to the Court, “do not concern necessary services, and hence do not transcend the realm of purely private matters and implicate the ‘public interest’ under Tunkl.” (Id. at p. 759; see, also, e.g., Benedek v. PLC Santa Monica (2002) 104 Cal.App.4th 1351, 1356-1357.) 

In other words, in the context of sports and recreational activities, a release from future negligence may be enforceable. However, understanding two legal claims may assist to invalidate a such a release—gross negligence and fraud.

INVALIDATING THE RELEASE

A Release from Gross Negligence is Unenforceable

In addition to a release being unenforceable when it adversely "affects" the public interest, “[a]n agreement made in the context of sports or recreational programs or services, purporting to release liability for future gross negligence, generally is unenforceable as a matter of public policy.” (Emphasis added.) (City of Santa Barbara, supra, at p. 751.) “‘Ordinary negligence’ — an unintentional tort — consists of a failure to exercise the degree of care in a given situation that a reasonable person under similar circumstances would employ to protect others from harm. [Citation omitted.] ‘Gross negligence’ long has been defined in California and other jurisdictions as either a ‘want of even scant care’ or ‘an extreme departure from the ordinary standard of conduct.’” (City of Santa Barbara, supra, 41 Cal.4th at pp. 753-754; see also, Eastburn v. Regional Fire Protection Authority (2003) 31 Cal.4th 1175, 1185-1186.) 

Examples of gross negligence, which may negate a release, include the following: 1) the failure to meet a specially assigned duty (City of Santa Barbara, supra, 41 Cal.4th at p. 754: a camp counselor failed to closely monitor a developmentally disabled child and the child drowned); 2) the failure to follow industry standards (Rosencrans v. Dover Images, Ltd. (2011) 192 Cal.App.4th 1072, 1086-87: a motocross organization did not follow industry standards which required caution flaggers on the entire race track and a rider was injured during a race); or, 3) the failure to follow a manufacturer’s recommendations (Jimenez, supra, 237 Cal.App.4th at p. 557: a gym member was injured falling off a treadmill and striking her head on adjacent equipment which the gym had placed in violation of the manufacturer’s recommended safe zone for spacing exercise equipment). 

A Release Agreement Induced by Fraud is Unenforceable

Not only will a finding of gross negligence negate a release, but a fraud or overreaching to induce the signing of a release may also invalidate the agreement. As a general rule, however, a person who signs a document may not avoid the impact of its terms on the ground that he or she failed to read it before signing. (Jimenez, supra, 237 Cal.App.4th at p. 563, citing Randas, supra, 17 Cal.App.4th at p. 163.) In other words, a typical defense of a signer—that he or she did not read the release but “just signed it”—has no legal significance. The person is bound by the contents of the signed writing.

“However, a release is invalid when it is procured by misrepresentation, overreaching, deception, or fraud.” (Jimenez, supra, 237 Cal.App.4th at p. 563) “It has often been held that if the releaser was under a misapprehension, not due to his own neglect, as to the nature or scope of the release, and if this misapprehension was induced by the misconduct of the releasee, then the release, regardless of how comprehensively worded, is binding only to the extent actually intended by the releaser.” (Jimenez, supra, 237 Cal.App.4th a p. 563 citing Casey v. Proctor (1963) 59 Cal.2d 97, 103.) “In cases providing the opportunity for overreaching, the releasee has a duty to act in good faith and the releaser must have a full understanding of his legal rights. [Citations omitted.] Furthermore, it is the province of the jury to determine whether the circumstances afforded the opportunity for overreaching, whether the releasee engaged in overreaching and whether the releaser was misled. [Citation omitted.]” (Frusetta v. Hauben (1990) 217 Cal.App.3d 551, 558 (Frusetta).) 

In Jimenez—a gym membership case—plaintiff only spoke Spanish and the company’s representative (who only spoke English) misled her, through gestures, to believe that she was only signing documents to become a member and not signing a release; in Frusetta, a personal injury case, the insurance company’s representative told plaintiff that the pre-printed check was to be partial payment, while in fact the check included the words “full and final settlement.” In both cases, the courts held that there was sufficient evidence to allow the cases to proceed to trial as to whether the misrepresentations (whether gestures or words) made the releases unenforceable. 

CONCLUSION AND PRACTICE POINTS

Increasingly, releases are used for all manner of activities. If you or your business must draft a release, knowing the foregoing limitations for a release is critical. Knowledge of tort and contract law is essential in determining whether the release agreement achieves the balance highlighted by the California Supreme Court in City of Santa Barbara: between the freedom of individuals to agree to limit liability (contract law) and the community’s interest to enable an individual to enforce a legal duty against a wrongdoer (tort law). (City of Santa Barbara, supra, 41 Cal.4th at p. 754.) Below are two sample forms to give you a better understanding how these agreements appear in a practical sense. These are general forms and are not intended to address your specific legal requirements. These forms are not and should not be used or relied upon as legal advice.

Sample Release of Liability Agreement #1

Sample Release of Liability Agreement #2

Disclaimer

This entry does not give specific legal advice about your specific legal problem. No text or graphic contained in this entry is to be or should be used or relied upon as legal advice. This entry does not create an attorney-client relationship. If you want specific legal advice about your particular legal issues, or if you want to create an attorney-client relationship, you need to retain the Law Office of Ron A. Stormoen by a signed written retainer agreement.