Exculpatory Case Analysis

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In the wake of this decision, all exculpatory clauses in use should be reviewed. However, it is not clear whether it is even possible to draft an enforceable clause after this decision.

Two of the deficiencies of the clause in the case at bar can easily be remedied. The word "fault" can be changed to "negligence." In addition, waivers can easily be drafted as individual forms, separate from the underlying registration form or contract.

It is also possible to comply with the court’s requirement that the risk must be contemplated by the signer, albeit not as easily as the other two requirements.

Justice Wilcox noted in dissent, "it is inconceivable that a reasonable person would not understand that, at a minimum, a waiver at an aquatic facility would cover the risk of drowning. What else would such a waiver cover if not the risk of drowning?"

The majority opinion wisely does not attempt to answer that question. As pointless as the inclusion of such a risk may be, however, compliance is nevertheless possible by enumeration of known inherent risks in the waiver.

However, there are other risks that are not obvious, the reason being that they are not risks inherent to the activity itself, but avoidable risks that patrons would not contemplate to be within the waiver. Enumeration of all such risks is neither possible, nor desirable.

If a business were to list all such risks, it would chance having the clause struck down as overbroad, just as the clause in the case at bar was struck down for including conduct that was intentional or reckless, rather than negligent.

Suppose, for example, that two patrons are injured at a swimming pool, both in slip and falls. One slipped on a puddle of water in the pool area, and the other slipped on a puddle of soda that had been spilled hours earlier, in an area not connected to the pool.

The first patron would be injured because of a risk inherent to using a swimming pool, and the second would not; the first patron would likely have contemplated that the waiver included the risk, and the second likely would not have. Drafting waivers to bar liability for the first sorts of risks, but not the second, will require thought and knowledge of the client’s business, but should be feasible.

However, even if a clause is drafted to satisfy these three concerns of the majority, it remains a practical impossibility for exculpatory contracts to be negotiable, as both the concurrence and dissent amply demonstrate. Either the transaction costs would be prohibitive, or the resulting clause would unavoidably be far more complicated to the signer than a well-drafted standardized form.

Furthermore, in many instances, there isn’t even any direct interaction between the participant and the business. For example, when an athletic league for a team sport requires its participants to sign exculpatory waivers, the participants likely never even see any employee; more likely than not, the forms are distributed to them by their manager or coach, who certainly has no authority to negotiate on behalf of the facility’s owner.

The question thus becomes, what are courts to do when faced with an exculpatory clause that uses the word "negligence," appears on a form with nothing else but the waiver, and the waiver is limited to risks inherent to a particular activity, but does not permit the parties to bargain over the clause’s terms?

Both the concurrence and the dissent take the majority opinion to task for implying that such a clause would be unenforceable. The criticism is appropriate, given the majority’s statement, "The form itself must provide an opportunity to bargain (emphasis added)."

However, the majority opinion does not attempt to explain how a business could negotiate over an exculpatory clause, or to justify why there should be such a requirement, even if were possible to comply with it.

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Should the court accept review in a case in which a form satisfies all its concerns, save the opportunity to bargain, it will be faced with only two options: (1) overrule previous holdings that exculpatory clauses are not invalid per se, and prohibit them altogether; or (2) withdraw the above statement that the form "must" provide an opportunity to bargain, and acknowledge the impossibility of compliance with that requirement.

The dissent and concurrence provide ample reasons why it is a practical impossibility to negotiate over the terms. For persuasive authority on why the opportunity to negotiate should not be a relevant factor at all, even if it were practical, parties should look to the Minnesota case of Beehner v. Cragun Corp., 636 N.W.2d 821 (Minn.App.2001).

In Beehner, the court held that the opportunity to negotiate is irrelevant, where the services provided are not a necessary activity, and the plaintiff was a voluntary participant. Beehner, 636 N.W.2d at 827-828.

The activity in Beehner was horseback riding, and the reasoning in Beehner is equally applicable to any other recreational activity that commonly requires a waiver, such as swimming.

— David Ziemer

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David Ziemer can be reached by email.