Some activities are inherently risky. Visitors of certain types of businesses such as ski resorts, gyms, and amusement parks know there is a chance they could get injured when they engage in the activities those businesses offer. To protect themselves against potentially costly lawsuits, businesses can use a liability waiver to shift the risk from themselves to their customers.
Liability waivers are a type of contractual provision in which one party agrees not to hold the other party legally responsible for a set of acknowledged risks. Businesses may ask customers to sign a liability waiver saying that they will not sue for damages if they are injured on the business owner’s premises.
Courts have generally found liability waivers to be enforceable, but they are not a silver bullet. If you ask your customers to sign away their right to sue, you must draft a liability waiver that will stand up to scrutiny if tested.
When Is a Liability Waiver Appropriate?
Liability waivers are most commonly used by businesses that offer dangerous activities. “Dangerous” does not have to mean an extreme activity like skydiving, CrossFit, or martial arts, however.
There is no definitive list of circumstances in which businesses should or should not use a liability waiver.
For practical reasons, not all businesses ask customers to sign liability waivers. Grocery store patrons, for example, could slip and fall on a wet spot and sue the store for their injuries, but they are not asked to sign waivers before shopping. The risk of a slip-and-fall accident is low, and it would require a lot of time and resources to get every shopper to sign a release. It is more practical for grocery stores to clean up spills and use “wet floor” signs when appropriate to mitigate their liability.
On the other hand, if the grocery store has a play area for children to use while their parents shop, the store might ask parents to sign a waiver releasing the store from liability for injuries suffered while using the play area. In fact, this is what BJ’s Wholesale Club did, and the waiver ended up protecting BJ’s from a lawsuit.
Liability waivers are typically not used in an employment context to protect the business against claims arising from work-related injuries. This is because employees cannot sue their employers for injuries, except in very rare cases. Instead, they are compensated by the business’s workers’ compensation insurance. An employer could ask an employee to sign a release that is not related to injury claims, however, such as a release barring legal claims over separation or termination of employment.
Are Liability Waivers Legally Enforceable?
The enforceability of liability waivers is generally a state law matter, and states vary widely in their stance towards these provisions. Some states, including Louisiana and Virginia, consider waivers of liability for physical injury to be unenforceable. Other states have a freedom-of-contract stance and allow liability waivers if they meet a few basic requirements.
To be legally enforceable in states where they may be used, a waiver should meet the following criteria:
In summary, a liability waiver should be as detailed and as clear as possible. It should describe the activity the customer will engage in and its location, list the possible risks and injuries that could arise from that activity, and release the business from negligence to the full extent of the law, without creating a blanket shield against grossly negligent conduct. The names and addresses of the parties must be included, and the waiver must be presented to each individual customer for their signature, as a release that purports to waive liability on behalf of a group is not likely to be enforceable. Above all, have an attorney review the waiver of liability to ensure it complies with applicable state laws and will pass muster if tested in court.
Are You Doing Everything Possible to Protect Your Business?
The decision to have customers sign a liability waiver is usually industry-dependent; but new risks are constantly emerging, and companies must always be prepared to update their mitigation strategy.
Although a liability waiver is not a guarantee against all liability, when well-written, it can be an important part of a company’s risk management strategy. One-size-fits-all online documents that are not tailored to your unique business activities and jurisdiction’s laws could fail a court challenge. For help creating a customized liability waiver designed specifically for your business, contact our office to schedule an appointment.