Hepler Broom, LLC

Total Eclipse of …Liability? A Cosmic Reminder of the Use and Effectiveness of Exculpatory Language in Contract

September 12, 2017

Southern Illinois was recently in the national spotlight as the path of a total solar eclipse passed across the state. This rare occurrence brought hundreds of thousands of people to a thin path of the state to experience a natural phenomenon that, if not experienced correctly, could cause serious and permanent eye injuries.  It also created opportunities for some to profit from this influx of celestially motivated travelers. This event provided a reminder of the potential uses of exculpatory language in contract; namely to limit or eliminate liability by an express assumption of risk wherein one party consents to relieve another party of a particular obligation.

In Illinois, parties may allocate the risk of negligence as they see fit, and, as a general principle, exculpatory clauses do not violate public policy as a matter of law. Platt v. Gateway Int’l Motorsports Corp., 351 Ill. App. 3d 326, (5th dist. 2004) Despite their viability, exculpatory agreements are not favored by courts and are strictly construed against the benefiting party

An exculpatory clause, to be valid and enforceable, must contain clear, explicit, and unequivocal language referencing the type of activity, circumstance, or situation that it encompasses and for which the plaintiff agrees to relieve the defendant from a duty of care. See Platt v. Gateway Int’l Motorsports Corp., 351 Ill. App. 3d 326, (5th Dist. 2004). The precise occurrence that results in injury need not have been contemplated by the parties at the time they entered into the contract. It should only appear that the injury falls within the scope of possible dangers ordinarily accompanying the activity and, thus, reasonably contemplated by the plaintiff. Garrison v. Combined Fitness Centre, Ltd, 201 Ill.App.3d 581, (1st Dist. 1990) Courts have determined that the foreseeability of a specific danger is an important element of the risk which a party assumes and serves to define the scope of an exculpatory clause. Larsen v. Vic Tanny International, 130 Ill.App.3d 574, (5th Dist. 1984). “This is but another way of stating that, although the type of negligent acts from which a person expressly agrees to excuse another need not be foreseen with absolute clarity, such acts cannot lie beyond the reasonable contemplation of the parties.” Id.

In short, to be effective, an exculpatory agreement must clearly identify the risk and the injury/damage must be reasonably within the scope of the risk identified. When properly drafted, Illinois courts have upheld exculpatory clauses in a broad range of activities resulting in personal injury and property damage.

Let’s consider an example involving the aforementioned eclipse. Imagine old farmer John, the owner of a hundred acres of land directly on the path of totality in close proximity to an interstate highway.  As he calculates his projected profit for charging $5 or even $10 per person to use his land to watch this cosmic wonder, he briefly considers if he needs to protect himself from anyone who might suffer a permanent eye injury while on his property.  He sits down and pens the following limitation of liability clause:

BY SIGNING THIS DOCUMENT, YOU AGREE TO WAIVE ANY CLAIM
AGAINST FARMER JOHN FOR ANY INJURIES SUSTAINED, REGARDLESS OF
THEIR CAUSE, EVEN THOSE CAUSED BY FARMER JOHN.

Despite his best intentions, this language fails to identify, with the requisite specificity, the type or types of activities that it seeks to relieve farmer John from a duty of care. General clauses of this breadth have been routinely held by courts to violate public policy as they fail to inform the signee of the nature of the risk being waived. Short answer, farmer John’s exculpatory contract is not worth the paper it was printed on.

Another limiting factor in the enforceability of exculpatory agreements is when the damage/injury falls outside of the scope of the risks encompassed by the language. Two recent appellate decisions involving exculpatory agreements used by fitness clubs are instructive. Compare Hawkins v Capital Fitness, Inc., 390 Ill. Dec. 510 (1st. Dist. 2015) with Cox vs. US Fitness, LLC., 377 Ill. Dec. 930 (1st Dist. 2013). Both cases involve exculpatory language within the club membership agreements and both included language that that expressly limited liability against the club for injury “associated with fitness classes” and/or the “use of the equipment.” In both instances, the appellate courts held that the language was sufficiently specific and unambiguous to relieve the business from injuries associated with fitness activities. The distinguishing factor was the nature of the injury and its foreseeable relation to the fitness activities contemplated by the agreement. In Cox, a personal injury involving the use of weights resulted from negligent instruction provided by a personal trainer employed by the club. The court in Cox held that the injury was reasonably within the scope of the agreement and was reasonably foreseeable by the party expressly assuming the risk. In Hawkins, the injury occurred when a club patron, while using the fitness equipment, bumped into a mirror attached to the wall, causing it to fall and strike Hawkins as he too was using fitness equipment. The court in Hawkins held that the injury was not within the scope of the exculpatory language within the membership agreement. The court noted that, though the language was sufficiently specific and unequivocal to limit injuries associated with the use of equipment, the specific injury claimed was not foreseeable as, when the agreement was signed, Hawkins and Capital Fitness did not contemplate that Hawkins might be struck by the mirror.

Despite the rigorous judicial scrutiny, exculpatory agreements are an important tool for individuals and businesses when the power to contract exists. These agreements can effectively shift risk when known risks/dangers associated with specific activities can be identified. Countless recent appellate decisions have shown that the decision to uphold exculpatory agreements is heavily fact sensitive. To maximize the likelihood that exculpatory clauses will be upheld by courts, the language should be limited to only those risks reasonably related to the drafter’s activities and the drafter must fight the urge to use broad and general language in an effort to encompass any potential injury/damage.