If you are starting or operating a business in which clients are inherently at risk when participating in an activity sponsored by or on the property of your business, you will need a release of liability form.
You may have heard these forms called by other names:
- Release of liability form
- Liability waiver
- Hold harmless form
- Release form
These are substantially the same thing: a legally binding document that educates your clients about the potential risk they face but which releases your company from potential liability.
However, you and your clients may have some misconceptions about what a release of liability is and is not. Not all liability waivers are enforceable, and a release of liability may not mean what you think it means (to quote Inigo Montoya).
What Is a release of liability form?
As we stated earlier, it is a legally binding document meant to educate your client and protect you. You may only need one to satisfy a requirement for obtaining business insurance, but it is a good business practice to have one as part of your risk management program if you conduct a potentially dangerous activity or have substantial interaction with the public.
A signed release of liability waives the rights of the signatory to make a liability claim if he or she is injured. The form is supposed to limit the number of negligence cases filed by clients against your business.
Our Dallas business attorneys discuss the basics of protecting your business through liability release forms in this video.
What a release of liability form is not
A release of liability does not equate to prevention against being sued.
Let us repeat that: A liability waiver does not prevent a client from filing suit against you in a court of law. All it does is shift the need to prove some of the legal and technical presumptions from you to the injured party. In certain cases and with statutory support, the form may be enough to get the case dismissed, but it is not enough to eliminate the right to sue.
A liability waiver also does not mean you can just send it to the injured party’s lawyer and forget about it. You are required to report that claim to your insurer and forward it to the insurance company for handling.
Also, release forms do not cancel the need for business insurance. You must be insured for the activities performed by the public at your facility.
Creating an enforceable liability release form
First, a word about where you should not get them. Do not obtain or use a general liability waiver form from a book or off the internet. Release language is state-specific and is not generally addressed by books and websites. The cost of an attorney to draft a release form is tiny in comparison to what a court case could cost you.
Another reason not to use an internet form is that you have no recourse against the source, whereas lawyers are bound by their state license, ethical requirements, and malpractice insurance to provide competent representation.
Instead, find a good stock release form suggested by a reliable source to your attorney to have it drafted specifically for use in your state and with your business and clientele. If you do not have an attorney, you can consult your state’s bar association referral program.
Once your release is drafted and finalized, have it reviewed every year or so in case of significant changes in the law.
The language of an enforceable liability release form is:
- Clear and concise
- In compliance with state law where the business is in operation
- Broad enough to cover a variety of injuries and risks
- Not so broad the release is unenforceable
You, your attorney, and your insurance company must know what your business related risks are for your particular business. The client must know what rights are being given up by signing the release.
Most states follow these general principles:
- Minors cannot release liability; people must be of the age of majority according to state law to release liability.
- Only a parent or guardian can release liability for a minor; no other adult may do so.
- Clients can release ordinary negligence claims, but you can still be sued for gross negligence and intentional harm.
- The release must be read, understood, and knowingly signed by the client.
- All blank lines must be filled in before the form is signed.
- All information must be accurate.
- The form must be signed before any injury occurs to be enforceable.
Depending on your business, you may wish to provide releases in large print, braille, or a foreign language, especially Spanish.
What to include in Your waiver
The waiver must state clearly what rights the parties are giving up and the language must be open and obvious. If the release is too one-sided in favor of your business, it may be unenforceable.
The release is meant to educate your client as well as release your business from liability. If language is included that goes beyond state law; the release may be void in its entirety.
Good business practices are Also required
Enforceable releases must be supported by good business practices. Your employees must be trained to politely force the client to read the release or take the time to explain it. They must know that every blank must be filled in. They must be able to insist the release be signed even in the face of a lost sale because the release does not give your business the right to disregard client safety.
Releases must be kept accessible at all times now and in the future. It is only useful if it can be produced in court. If it becomes lost or discarded, you could face the liability you were trying to avoid.
The well-drafted release of liability form is an essential good business practice to protect both your customers and your business from frivolous lawsuits. However, you need to understand exactly what the form means and what it will and will not cover.
Contact an attorney to learn more.