To bind a customer or business partner to a liability waiver in a contract, using what is called an “exculpatory clause,” requires specific contract-drafting skills. This is a lesson which the (apparently now closed) business learned in Lazaro Fresnedo v. Porky’s Gym III, Inc.

In the Fresnedo case, the majority opinion sets out, fairly concisely, all of the hoops an enforceable exculpatory clause must pass through:

• strictly construed against party which wants to enforce
• clear and unequivocal, such that ordinary person would know what he/she is contracting away
• unambiguous
• disfavored and narrowly construed
• totally without a hint of deceptive come-on OR inconsistent clauses

Ahh… that last one. The trap of saying too much.

Both the majority and the dissent agree that this sentence in the contract, alone, would be an enforceable exculpatory clause:

YOU ASSUME FULL RESPONSIBILITY FOR ANY RISK OF BODILY INJURY, DEATH OR PROPERTY DAMAGE DUE TO THE NEGLIGENCE OF ANY OF THE CLUBS OR OTHERWISE WHILE YOU ARE ON THE PREMISES OCCUPIED BY ANY OF THE CLUBS.

But the defendant-corporation included three additional (dense) paragraphs, clouding the “clear and unequivocal” nature of that one sentence.

Per the majority, “[a]lthough this single paragraph of the release relied upon by the dissent may itself be plain and clear, the release is not comprised of a single paragraph…”

Per the dissent, ” [t]he language of the release is so simple and direct that it could have no other meaning.” Still, the majority wins and concludes, “[i]f (as the dissent posits) the broad language contained in paragraph Four is so plain, clear, unambiguous and all-encompassing, why would paragraphs One and Two be necessary at all?”

Drafting liability waivers, arbitration clauses, forum selection clauses, jury waivers, and other clauses takes skill and knowledge of federal and state law but it also requires that the lawyer be current on case law. It also requires you, and your business, to have your contracts routinely reviewed so they are up to date and enforceable.

Moreover, as we see in this case, all terms have to be consistent. If your contract has liability waivers but you have pieced them together from various sources (like from the internet, gasp), the terms may look consistent to you but there are probably holes that a clever plaintiff lawyer can create. Here, the drafting party overthought the release. And, here, the plaintiff weaved through it and defeated the whole purpose.

If you are looking for a contract with releases, or if you are smart enough to consider having your existing contracts reviewed and updated, hire a qualified lawyer in your jurisdiction. Why do business with forms that are unenforceable, only to learn that at a time when you need them? Ask prospective attorneys if they use forms, where they got the language they intend to use for your contract, and when was the last time it was updated. Ask questions.

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