It has become the norm for business owners to have their clients and customers sign liability waivers to protect the business owner from being sued if something bad happens, like an injury. But do these waivers even work?

First, let’s have a look at what waivers actually do. Waivers serve a few different purposes, so your use of one should depend on what you’re trying to do. Some of the main purposes of waivers are:

• lay out actual risks, give notice of potential danger

• warning to participant to self-assess for safety

• psychological deterrent to lawsuit

• defense to an actual lawsuit

Whether waivers are a successful defense to a lawsuit or not, they are still a good idea, because they warn customers of risks and give a sense of personal responsibility to the customer, thus reducing the chances of harm due to customer negligence or recklessness (which can still result in liability for you). It also often makes the person who signed it feel like a lawsuit isn’t an option, so it makes people pursue other options before bringing a lawsuit.

But if there is an injury and a customer sues, will the waiver be upheld and the defense be successful? In Oregon, it depends on several different factors. In a recent case, Bagley v. Mt. Bachelor, Inc., 2014, the Oregon Supreme Court laid out the factors to be considered:

Procedural Factors

• whether the release was conspicuous and unambiguous;

• whether there was a substantial disparity in the parties’ bargaining power;

• whether the contract was offered on a take-it-or-leave-it basis; and

• whether the contract involved a consumer transaction.

Substantive Factors

• whether enforcement of the release would cause a harsh or inequitable result to befall the releasing party;

• whether the releasee serves an important public interest or function; and

• whether the release purported to disclaim liability for more serious misconduct than ordinary negligence.

The court considers these factors as part of the “totality of the circumstances” to determine whether enforcing a waiver would be “unconscionable” and bad for the public.

In the Bagly case, a snowboarder was injured at Mt. Bachelor Ski & Summer Resort. The trial and appeals courts dismissed the case because the injured snowboarder had signed a waiver of liability. The Oregon Supreme Court (our final appeals court for decisions about state laws here in Oregon) reversed the decision of the lower court and ruled that the liability waiver in this case was unconscionable. Under the procedural factors, the court found that while the language was conspicuous and unambiguous, the other factors weighed heavily in favor of the injured snowboarder. The customer and the resort did not have equal bargaining power. The snowboarder could either sign the release or not go snowboarding. Under the substantive factors, while the release did not purport to waive more than negligence, the other factors weighed heavily in favor of the snowboarder. Enforcement of the waiver would mean that the snowboarder would be on the hook for the resort’s negligence, to the tune of $20M. Additionally, the resort served an important public purpose function.

So, the court ruled that the waiver could not be held up. What that means is that the case was able to proceed and the next step became determining whether the resort was negligent and whether that negligence caused the snowboarders’s injury.

And now, back to you and your business.

Will your liability waivers work? If you’re pulling a waiver off the internet and assuming it will work, I would urge you to get that waiver reviewed and revised by a business planning lawyer. You definitely don’t want to find out too late that your waiver is ineffective.

If you want to get started, read about our business services and schedule an appointment.

To your family's health + happiness,

Candice N. Aiston

P.S. Here's another post about business planning and how to get started.

___

Want to use this article in your newsletter or on your blog or website?

You can! Just please be sure to use this complete blurb with it:

Candice N. Aiston is an Legal Planning Attorney for Estates + Businesses in the Portland, Oregon area. She helps people to prepare for a lifetime of security, prosperity, and guidance. If you would like to receive her free reports, please visit http://aistonlaw.com/ to sign up. Follow her Facebook page for daily planning tips: https://www.facebook.com/aistonlaw/.