An exculpatory clause is one that attempts to release one of the contracting parties from any tort liability that may result from one party's failure to exercise due care in the performance of the contract. Each state has its own law governing exculpatory clauses, and many state courts have refused to enforce exculpatory clauses for reasons of public policy. Those with questions about a specific exculpatory clause should seek legal advice.
Exculpatory clauses are designed to release one party from blame if something goes wrong, even if that party was negligent. The clauses need not be contained in an actual, formal contract, so long as they are communicated to and consented to by the party who relieves the other of liability. For instance, the typical parking garage will have an exculpatory clause printed on its automatic tickets, one which places the risk of damage to the vehicle upon the party who chooses to park there, and relieves the garage from all liability for such damage.
Public Policy Considerations
Several areas of public policy come into play when courts decide whether exculpatory clauses are legal or enforceable. While American law tends to support freedom of contract, public policy wishes to keep people from being injured, and one way to do so is to deter negligence by holding parties responsible for causing injury. Some activities are necessary to life; some are absolutely non-essential. Some activities (for example, skydiving) also constitute a greater risk of injury no matter how careful the parties are, and this demands a certain level of personal responsibility for risk. In creating exculpatory clause law, each jurisdiction attempts to balance these competing considerations.
One of the seminal cases dealing with exculpatory contracts is Tunkl v. Regents of the University of California (1961). In Tunkl, the California Supreme Court created several factors for future courts to use in deciding whether to enforce exculpatory clauses. Under the Tunkl test, courts may choose not to enforce an exculpatory clause if the party offering the exculpatory clause offers a valuable public service to each member of the public, if that party has a great advantage in bargaining strength, if the transaction will place the other party's property under the control of the party seeking exculpation, and if regulation of the type of business at issue is appropriate.
Other States' Enforcement
Many states have implemented some form of the Tunkl factors, sometimes with minor variations, in deciding whether to enforce exculpatory clauses. However, all states have limited the effects of exculpatory clauses to negligent or accidental behavior; no state allows a potential defendant to contract out of liability for willful, reckless, or intentional behavior. Courts also retain broad discretion to decide that an exculpatory clause is unreasonable under contract law, or simply void due to a conflict with the public interest.