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Subrogation potential often crashes and burns in the face of exculpatory agreements and liability waivers. As a result, understanding and invalidating such waivers has become an indispensable aspect of the subrogation industry. On April 12, 2019, Lee Wickert with MWL’s new Austin, Texas office was featured in a New York Times article which looked at the confusing and often surprising effect that these risk-limiting agreements can have on possible third-party tort liability. The article—found HERE—came about as a result of a chart Lee created last year, entitled “Exculpatory Agreements and Liability Waivers In All 50 States.” That chart is featured on the MWL website and can be found HERE. The chart is regularly consulted by the firm’s subrogation clients.
The Times article focused on a retired New York lawyers’ objection to an exculpatory clause hidden within an agreement which the Queen’s Harbour Yacht and Country Club in Jacksonville, Florida requires its members to sign before joining. It exempted ClubCorp, which owns the club, from any liability incurred while any person — the renter, a family member, or even a third party — was using the cart. New York Times columnist Paul Sullivan, who is also the author of the book “The Thin Green Line: The Money Secrets of the Super Wealthy”, became curious as to how far establishments could go in absolving themselves of any tort liability. Upon finding the chart, he contacted and interviewed Lee.
While the article is self-explanatory, it underscores how society has become very risk-averse. It is hard to participate in any activity without being asked to read and sign some sort of exculpatory agreement or liability waiver in advance. A key tool of risk management is the exculpatory agreement – a generic term which can refer to a provision in a contract, the back of a receipt or invoice, or simply a statement posted in a prominent location, in which one of two things is stipulated:
(1) One party is relieved of any blame or liability arising from the other party’s wrongdoing regarding a particular activity, and/or
(2) One party (usually the one that drafted the agreement) is freed of all liability arising out of performance of that contract.
An exculpatory agreement is usually a provision contained in a contract between a service provider and a participant, relieving the service provider from any liability resulting from loss or damage sustained by the participant. The terms “waiver” and “release of liability” are usually used interchangeably. An example of an exculpatory clause is a dry cleaner’s receipt that includes a disclaimer purportedly relieving the dry cleaner from any liability for damage to the clothing during the dry-cleaning process. Disclaimers can appear as warning signs posted on playgrounds, sports arenas, constructions sites, or other areas involving risk of physical injury (“enter at your own risk” or “use at your own risk”). It is common to see signs like the following in places of business: “Park at your own risk!”; “Swim at your own risk!”; “Enter at your own risk!”; or “The occupier is not liable for any item damaged or stolen from this property however caused!” They can appear as part of the packaging or advertising for consumer products. They can also be found as a “license” allowing a person to be on business premises or to use certain property, subject to limitations. Sometimes they take the form of “click-wrap” or “shrink-wrap” agreements – the fine print you see, among other things, when you click through terms and conditions in accessing an online service or as part of the installation of a piece of software.
The New York Times article discusses how states treat and enforce these agreements differently and knowing the law in the state you are in has become essential for claims handlers and subrogation professionals alike.
If you have any questions regarding exculpatory agreements and/or liability waivers, or if you have any Texas subrogation questions or needs, feel free to contact Lee Wickert, who is in our new Austin, Texas office, at [email protected].