Sign At Your Own Risk: Are liability releases actually enforceable?

by | Sep 29, 2021 | Litigation & Local Counsel | 0 comments

You’ve probably signed more than a few liability releases in your lifetime—and you probably didn’t think twice about it (or even read all the way through before signing). But a liability release, or the lack thereof, quickly becomes important when someone is injured. If drafted carefully, a liability release is enforceable under Texas law and may allow the released party to avoid liability for personal injury claims based on ordinary negligence. Releases, however, will be narrowly construed against the released party in the event of any ambiguity.

Liability releases (sometimes called liability waivers) are used by business owners/landowners to protect themselves from liability for personal injury claims. Releases usually identify the activity involved, list common dangers associated with that type of activity, state that the signer understands those risks, and agrees not to sue the business owner or landowner for negligence.

You often do not have a choice except to sign a liability release if you wish to participate in a risky activity. Depending on the relationship of the parties, the release might be a stand-alone document or included as a provision in a larger agreement. Either way, a liability release is a contract and can be enforceable if drafted carefully.

There isn’t a statute that sets out what needs to be contained in a liability release in order for it to be enforceable. Instead, over the years, Texas courts have interpreted specific releases and determined whether they are effective or not. We can glean some guiding principles from these cases, but the enforceability of a particular release is still a fact-specific inquiry. You should exercise caution and consult an attorney when drafting a liability release to ensure it is drafted to meet your needs.

“Fair notice” requirement.

First and foremost, a liability release must meet the requirements of “fair notice,” which include (1) the express negligence doctrine and (2) the conspicuousness requirement. These fair notice requirements are designed to make sure the signer knows he is waiving his legal rights.

Under the express negligence doctrine, a party seeking indemnity from the consequences of their own negligence “must express that intent in specific terms” within the four corners of the contract. Ethyl Corp. v. Daniel Const. Co., 725 S.W.2d 705, 708 (Tex. 1987). The deciding factor is whether the contract specifically states what claims are being released. Is it clear that the releasing party is releasing the other party for claims for that party’s own negligence? Is it clear what activities are covered? If so, it’s likely the release satisfies the express negligence doctrine.

The conspicuousness requirement mandates “that something must appear on the face of the [contract] to attract the attention of a reasonable person when he looks at it.” Ling & Co. v. Trinity Sav. & Loan Ass’n, 482 S.W.2d 841, 843 (Tex.1972). What does that mean exactly? Don’t hide the release language in the fine print—it should draw the reader’s attention by use of a section title, contrasting font size or type, bolding, italics, etc.

The Texas Uniform Commercial Code, which governs the sale of goods as well as other commercial transactions (but does not govern service contracts), says that a clause is conspicuous when it has (i) a heading in capitals equal to or greater in size than the surrounding text, or in contrasting type, font, or color to the surrounding text of the same or lesser size; and (ii) language in the body of a record or display in larger type than the surrounding text, or in contrasting type, font, or color to the surrounding text of the same size, or set off from surrounding text of the same size by symbols or other marks that call attention to the language. Tex. Bus. & Com. Code § 1.201(10).

Adopting these principles, the Texas Supreme Court has explained that “language in capital headings, language in contrasting type or color, and language in an extremely short document, such as a telegram, is conspicuous.” For example, the Court held that a release was not conspicuous when it was placed on the back of a work order in a series of uniformly printed and spaced paragraphs, a provision on the front of the work order incorporated the 18 paragraphs on the back of the work order, and no headings or contrasting typeface were used. Dresser Indus., Inc. v. Page Petroleum, Inc., 853 S.W.2d 505, 511 (Tex. 1993).

Waiving gross negligence.

The Texas Supreme Court has indicated that pre-injury releases of future liability for gross negligence are void as against public policy. Bombardier Aerospace Corp. v. SPEP Aircraft Holdings, LLC, 572 S.W.3d 213, 230 (Tex. 2019). The idea is that conduct rising to the level of gross negligence is so egregious that liability for it should not be waivable.

There is some disagreement among the courts of appeals as to whether a party may validly release claims of gross negligence, but most hold that a release cannot absolve a party from his liability for gross negligence. For example, the Dallas Court of Appeals has held that a plaintiff’s execution of a contract specifically releasing a defendant from liability for negligence did not release the defendant from liability for gross negligence. Van Voris v. Team Chop Shop, LLC, 402 S.W.3d 915, 926 (Tex. App.—Dallas 2013, no pet.). The San Antonio Court of Appeals has upheld a release that, under the facts of that case, absolved the defendants from liability for gross negligence. However, the court declined to reach the question of whether a pre-injury release of claims for gross negligence violates public policy. Newman v. Tropical Visions, Inc., 891 S.W.2d 713 (Tex. App.—San Antonio 1994, writ denied).

Signing a release on behalf of a minor child.

The Texas Supreme Court has not yet decided whether a parent may waive liability on behalf of a minor child. At least one Texas court of appeals has held that a pre-injury release signed on behalf of a minor child is unenforceable. In Munoz v. II Jaz Inc., 863 S.W.2d 207 (Tex. App.—Houston [14th Dist.] 1993, no writ), parents sued an amusement park for damages after their daughter fell off a ride. The Houston Court of Appeals held that the Texas Family Code “does not give parents the power to waive a child’s cause of action for personal injuries” because “such an interpretation of the statute would be against public policy.”

Are releases and indemnity agreements the same?

No. Liability releases and indemnity agreements both have the effect of relieving a party in advance of responsibility for its own negligence. But releases and indemnity agreements are distinct provisions. A release operates to extinguish a claim or cause of action and is an absolute bar to the released matter; it is an affirmative defense. In contrast, an indemnity agreement creates a potential cause of action; it is a promise to safeguard a party against an existing or anticipated loss. Regardless of the label, both releases and indemnity agreements are risk-shifting provisions that, in the context of relieving a party of responsibility for its own negligence, are considered “extraordinary.” Van Voris v. Team Chop Shop, LLC, 402 S.W.3d 915, 918 (Tex. App.—Dallas 2013, no pet.).

Given the importance of having an enforceable liability release, you should have a lawyer review the language of your release. Obtaining legal advice up front can certainly pay off in the long run when you have a release that allows you to avoid a lawsuit entirely or limits the chances of a judgment against you.

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