Use Of Contractual Releases To Limit Liability For Negligence
LGC Staff
Mon March 16, 2015
3:59 AM UTC
Richard J. Reese

By Richard J. Reese

Businesses have several legal tools at their disposal to reduce exposure to liability.  One such tool is a contract that releases a company from liability for a particular activity in which its customers engage.  For example, a skydiving company may require a customer to sign a release stating that the customer understands and assumes the risks of skydiving before the company allows the customer to skydive.  Such releases can be useful tools for limiting liability, particularly because, in certain circumstances, they can be used to release a company from liability for its own negligence.

A recent decision by California’s Second District Court of Appeal provides an example of how a contract can successfully release a company from liability for its own negligence.  In Grebing v. 24 Hour Fitness USA, Inc., the plaintiff gym member signed a membership agreement that stated “you understand and voluntarily accept this risk and agree that 24 Hour . . . will not be liable for any injury.  You further agree to . . . defend and indemnify 24 Hour from all liability . . . in connection with claims . . . brought by you . . . even if 24 Hour was negligent.”

Plaintiff was subsequently injured when a rowing machine clip failed, causing the handle bar to break free from the cable and strike the plaintiff in the forehead.  The plaintiff filed a lawsuit against 24 Hour, asserting several causes of action, including negligence.  The defendant moved for summary judgment, arguing, in part, that the written release was a complete defense to a negligence cause of action.  The trial Court granted summary judgment, and the Court of Appeal affirmed.

Based on the “clear and explicit language” of the release, the Court held that the plaintiff contractually “assumed responsibility for the risks arising from his use of 24 Hour’s facilities, services, equipment, or premises” even if 24 Hour was negligent.  If 24 Hour had not included such a clear release in its membership agreement, its motion for summary judgment would have been denied, and 24 Hour likely would have been found liable for the injuries.

The Grebing case shows that a properly drafted contractual release can, in certain circumstances, protect a company from liability for its own negligence.  Businesses should therefore consider using this kind of release where applicable.  Of course, because the release shifts the risk of a particular activity to the customer, it is important to ensure the customer is fully aware of the scope of the release and adequately warned of potential hazards.  LGC can assist your business in preparing releases and implementing procedures that limit the risk of harm to your customers.

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