Liability Waiver: Key Terms, Examples

What is a Liability Waiver?

A liability waiver, also known as a waiver of liability, release form, or hold harmless agreement, is a legally binding document where a participant, such as a customer or an employee, accepts risk and agrees to waive the company’s liability for damages associated with inherent dangers. The limitation of liability aims to insulate the company from civil damages if the participant suffers from losses or injuries [1]. However, it is important to keep in mind that a liability waiver may not always remove liability in cases of gross negligence or intentional harm.

Why Use a Liability Waiver?

The most significant reason to use a liability waiver is that businesses can protect themselves from damages claims and lawsuits associated with inherently risky activities. This level of protection can shield your profitability and company reputation as well as avoid unnecessary legal disputes.

For example, if you run an driving range where people come to hit golf balls, there is inherent risk in consumers participating in this activity. They may slip and fall on one of your mats, another customer may get hit by a stray golf ball, or a customer could walk into the backswing of another customer. You will want to have guests sign a liability waiver while participating to make sure you are protected should anything go wrong.

Here is wikipedia's definition of a liability waiver.

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Key Parts of a Liability Waiver

The most important part of a liability waiver is that you use obvious language. If your company is asking people to waive their rights, it doesn’t look favorable in court if the terms are buried inside of other provisions and hard to find or identify. The key to enforceability in a legal document is following local contract rules and using clear, concise language.

Key parts of a liability waiver include:

Part 1. Inherent Risks

Inherent risks are those that we take when engaging in specific activities. Bungee jumping or operating a motor vehicle are examples of such activities. Acts of gross negligence don’t preclude you from civil claims [2]. In fact, in many jurisdictions, a waiver cannot protect a company from its own gross negligence. Make sure the risk is clearly outlined in the waiver.

Part 2. Assumption of Risk

The assumption of risk clause indicates that the participating party understands the associated dangers of using your products or services. This section reduces the chance of a participant claiming that they weren’t aware of the risks.

Part 3. Release Clause

Release clauses state that your company doesn’t carry the liability burden arising from harmful events. You should concentrate on making this section as clear and straightforward as possible so that the other party understands what rights they are giving up explicitly.

Part 4. Indemnification

Indemnification clauses are acknowledgments made by participants. They agree to pay your legal costs and attorneys’ fees if their actions result in someone filing a lawsuit against you. This clause is an essential component to deterring lawsuits from third parties.

Part 5. Insurance

The insurance clause of your liability waiver should clearly state what your insurance policy coverage terms are regarding participant damages. This statement reinforces the conspicuous language aspect of a liability waiver.

Part 6. Choice of Law

Choice-of-law clauses assign the venue and forum laws by which the legal liability waiver recognizes. Since parties may live in separate geographic areas, this section helps you clear up any confusion regarding applicable rules and regulations.

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Examples of When to Use a Liability Waiver

Are you still unsure of how liability waivers can help your company? Real-world examples can help you understand when to use a liability waiver.

Check out the five examples below:

Example 1. Ski Resorts

Skiing is an activity that carries a known risk of injury, which requires skiers to possess sound judgment, physical strength, and outdoor experience. Ski resorts can use liability waivers to prevent claims related to skier injuries. Some even print a disclaimer directly on the lift pass.

Example 2. Contractors

Contractor relationships are perfect for liability waivers. A waiver can preclude you from liability claims that occur at your facilities. The contractor or their employer is responsible for covering their claims unless you acted with negligence.

Example 3. Insurance Claims

Once customers accept an insurance settlement, insurance companies want reassurance that the claim is settled in full. Liability waivers in release forms help them achieve this objective.

Example 4. Amusement Parks

Amusement parks are inherently dangerous places. Operators are wise to incorporate a liability waiver into their ticket sales process. Doing so will protect you from unpreventable damages or harm.

Example 5. Massage Therapists

Massage therapy generally provides natural health benefits. However, an unknown condition or prior injury could result in new or worsening injuries. Massage therapists should protect themselves from claims by asking customers to sign liability waivers.

Example 6. Tourism Companies

The act of traveling by car, bus, train, or plane is dangerous in and of itself. Tourism companies not only utilize these modes of transportation, but they also offer extraneous activities that carry an inherent risk. Liability waivers ensure that you can keep the fun going as long as you are doing your part to keep everyone safe.

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Risks of Not Using a Liability Waiver

You risk subjecting your business or yourself to unwanted or unnecessary dispute processes when you do not use a liability waiver. While there may be some advance fees associated with developing, disseminating, and signing a liability waiver, you are protecting your business from legal disputes in the short and long term by doing so.

While a liability waiver provides some protection, it does not offer total protection, and it shifts the burden of proof to the client. Additionally, the liability waiver alerts the signee that they are about to embark on a potentially dangerous endeavor. This reason is why you should include language in your liability waiver that covers all possible types of legal harm.

Do Signed Liability Waivers Hold Up in Court?

Liability waivers hold up in court if they meet specific factors. For instance, California liability waivers must be unambiguous and are required in certain transactions. In contrast, Montana may not need them in some cases. In general, different states may have different standards as it relates to the enforceability of liability waivers – especially concerning gross negligence, willful misconduct, and recklessness [3].

The best way to learn about the enforceability of your liability waivers is by speak with business lawyers directly.

Can Customers Sue You Even After Signing a Liability Waiver?

A liability waiver doesn’t preclude the operator or provider from claims arising out of negligence. If the participant can prove that you were negligent in some capacity, they can generally hold you accountable for their civil damages. As such, your organization must maintain the premises and equipment used by contract parties according to the law.

How to Write a Liability Waiver

Writing a liability waiver may seem like a straightforward task. However, the provisions contained within may be subject to other federal and state laws. By having a contract drafting process in place, you can effectively reduce the chance of making legal mistakes and contractual errors.

Follow the eleven steps below when writing a liability waiver for your organization:

• Step 1. Identify all inherent risks associated with your products or services
• Step 2. Make a list of all stakeholders affected by these inherent risks
• Step 3. Consider associated future threats that may arise
• Step 4. Compile your liability insurance policies in one place
• Step 5. Determine which governing laws you want to apply to your waivers
• Step 6. Schedule an initial consultation with contract lawyers
• Step 7. Bring your findings and notes to your first meeting
• Step 8. Receive the first draft of your liability waiver
• Step 9. Approve the draft for finalization by your lawyer
• Step 10. Ask stakeholders to sign a liability waiver as needed
• Step 11. Retain copies of signed liability waivers and supporting evidence

In addition to writing a liability waiver with an attorney, you may also want to ask them about the contract signing procedure. Some companies ask employees to read the liability waiver out loud before permitting the customer to sign it. This practice, when performed uniformly, can strengthen their enforceability.

Common Types of Liability Waivers

A general liability waiver will address your legal needs from an all-around standpoint. However, your business could benefit more by using a document that makes sense for your specific relationships with employees, vendors, and more. Consider the different options available to make the most informed decision possible.

There are seven types of liability waivers, including

• Type 1. Accident liability waiver
• Type 2. Activity participation waiver
• Type 3. Contractor liability waiver
• Type 4. General liability waiver
• Type 5. Mutual liability waiver
• Type 6. Personal injury waiver
• Type 7. Property liability waiver

Regardless of what you call your documents, they essentially all perform the same function and need personalization for your business situation. While the language may differ slightly, these documents waive the right to legal claims to avoid a lawsuit.

Getting Help With Liability Waivers

Liability waivers are central to protecting your company from liability. Contracts are only as powerful as the words they contain. A well-crafted document will accomplish this goal while reducing your legal exposure

If you need help driving a liability waiver or other release of liability, contract lawyers can help. They can assist you from the initial intake all the way to the contract signing. Most contract lawyers offer counsel as business lawyers, which means they’re well-suited to help you navigate complicated matters.

Sources

1. ^ Waive - Cornell Law
2. ^ Tort - Cornell Law
3. ^ Montana Code Annotated 2023