If a Business Has a Release Form, Does That Mean It Can Never Be Sued?
If you've ever done something wild and crazy, like bungee jumping, skydiving, or breaking the world hot dog-eating record, you probably had to sign a release form. You may have signed without looking at it, not thinking about who and what you were releasing them from. These documents may protect businesses from liability for property damage, personal injury, and wrongful death.
Small businesses, independent contractors, and many others use general release forms to protect themselves from legal action if anything happens at their locations. High-risk activities like skydiving have more specific liability releases. If you operate a potentially risky or costly business, your business insurance may require a release or waiver.
Small business owners should know the legal vocabulary necessary to understand business release forms:
- A release transfers the responsibility from one party to another. For instance, if you rent a bike for the day, the release transfers responsibility for any injury from the bike shop onto you. Most release forms require the user to use the item properly.
- A waiver removes all responsibility from anyone. If you rent a bike and waive the right to sue the bike shop, no matter what happens you cannot sue the bike shop.
- Liability refers to who must pay for injuries or damages. In a personal injury case, knowing who is responsible and who must pay is important. If you released the bike shop from injuries, you are liable if you fall off and break your arm. However, the bike shop would be liable if the wheel fell off because you did not release them from damages due to bad repairs.
- Gross negligence is a breach of duty beyond ordinary lack of care. For instance, if you fell off the bike and broke your arm, the bike shop might not have to pay. But if they sent you out with a bike with no brakes and a loose seat, you might still recover even if you fell off because you were clumsy.
What Is a Release Form?
A release form, sometimes known as a "hold harmless agreement," is a legal document that limits the business's liability if the business's services injure the customer. Some releases protect businesses against legal claims. The "release" is a "release of claims" or a "release of liability" by the user. The "releasor" is the user; the "releasee" is the owner or operator.
Types of Release Forms
Different businesses need different release forms to protect them from possible legal action:
- A photo release form tells visitors that photographs or videos are being taken at a business location. The visitors won't receive compensation if their image appears in promotional material.
- A liability release form explains the risks of an activity or product use and releases the owner or manufacturer of any responsibility for injury if the item is used correctly. The warning tags on hair dryers and the placards on amusement park rides are types of release of liability forms.
- A liability waiver form explains the risks and waives liability for any injury or death resulting from the activity. High-risk activities like bungee jumping often use liability waivers. Other business operations with liability waivers include heavy construction, which may require liability waivers before excavations, or speculative investment contracts.
Liability waivers are sometimes known as "assumption of risk" forms. If serious injury or death results from the activity, the victim "assumes the risk" of harm, and the business is not liable.
Exceptions to Releases and Waivers
State laws treat release forms as contracts. As long as all parties agree to the terms of the contract, the release agreement is enforceable. There are circumstances when the courts will not enforce a release or a waiver:
- The agreement violates public policy. A release agreement protects the business from legal action but does not remove the requirement for safety. An agreement that encourages or protects the owner's negligence is not enforceable by the courts.
- There is gross negligence by the owner or operator. Related to the first point, even the most dangerous activity must be as safe as reasonably possible.
- The agreement is confusing or ambiguous. Unclear language may be the number one reason why the court will not enforce certain releases and waivers. A release that says "user assumes all risk of hazard if used properly" is unclear and would not be enforceable no matter what happened.
- The user did not know about the agreement. This is sometimes called "failure to warn" in product liability cases. It is why hair dryers have red tags, and theme parks have signs every few feet warning riders that people with bad backs should not ride. Users cannot accept responsibility if they are unaware they are doing so.
What To Write in a Release Form
Many businesses use online templates for general releases. As long as the forms have all the information you need, they should be sufficient. Most templates are "fill in the blank" style forms that allow businesses to add details for their industries. Your release form should include:
- Your business name and contact information.
- A description of the activity or product. For instance, "User is renting a ten-speed bicycle for one hour."
- A description of what the release does. "Bike Shop is not responsible for any injuries due to falling off the bike, road hazards, or improper use of the equipment. User assumes all risk and liability during their ride."
- Space for the user's name and contact information.
If you use a "fill in the blank" form, fill in all blanks, or mark them with a "N/A" before signing. This prevents claimants from saying you added terms later.
Other Release Form FAQs
Keep a few things in mind when writing or reviewing your release form. Your release should be easy to read and free of legal jargon and fancy lingo. If you're unsure what to say, get legal advice or use common language. There is nothing wrong with a release that says, "We're not responsible if you fall off the bike."
For high-risk activities, review possible hazards with your customer and go through the process step-by-step. Don't assume that experienced mountain bikers understand all potential dangers. Tell them it is for their protection as well as yours. Don't let anyone sign until everyone agrees to all terms.
Keep your release forms with all other documents. Many businesses toss release forms at the end of the day or week. This is a mistake. Personal injury claims can appear months or years later, depending on the statute of limitations in your state. Ask your liability insurance company how long you should retain documents.
Need Help? Ask a Lawyer
Property owners, startups, small businesses, and anyone hosting an event should consider a liability release. If you use an online template, you should still have a local attorney review your form so you don't leave anything out. Having a release should be part of your business plan to protect your business and yourself.
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