What Is a Release of Liability and Why Does it Matter?

What is a release of liability and why does it matter?

A general release of liability, also known as a liability waiver, is a contract between two parties to release one party from liability or harm that may arise from ordinary negligence in advance of an incident occuring. A release of liability contract should be clearly written in order for a person of ordinary intelligence to comprehend without additional explanation for the contract to be enforceable. There are some instances where a party may not be released from liability. Gross negligence won’t be waived from liability. Activities for which parties frequently require release of liability waivers include: 

  • Participation in sports, recreational, or related activities
  • Attendance at sports or entertainment events
  • Use of a venue or premises

A release of liability is not used to release a party from prior instances in which harm has already occurred. It is more commonly used in instances where harm has not yet occurred or may be possible or likely to occur based on the events to come.

When an individual signs a release of liability, it means he or she will not be able to seek compensation from the other party for the injuries and the damages that he or she has sustained. Insurance companies are rather swift to contact affected parties and offer some money to sign a release of liability in hopes that it’ll be signed without the party fully investigating injuries and damages. They may even tell the affected parties that they’re still able to file a claim later. It is recommended to be very careful when signing a release of liability because once you sign it, it essentially means you’re no longer going to pursue an injury claim or sue the person. You then can no longer go back and ask for more money if you’ve made a mistake about your injury or damages. Depending on the injury or damages, it can be beneficial to consult an attorney before signing a release of liability contract.

A Release of Liability Use Case

Let’s say a landlord has a tenant in a property and they have a dispute about the rent, security deposit, or some other claim. The landlord decides to resolve the situation without going to court and gives the tenant some money in exchange for the tenant to drop the claim. If the landlord doesn't get a release of liability signed, the tenant can always come back with the same claim in the future and sue for damages. It could be years later depending on the statute of limitations for the claim to be resolved. On the other hand, if the landlord gets the tenant to sign the release of liability contract in exchange for the money, the landlord can present the document in court and the judge will toss the tenant’s claim out since the tenant already waived everything.

Release of Liability Recommendations

It is recommended that whenever a deal is settled out of court with anybody, whether it be a tenant, a buyer on a contract, a seller, any party related to business, or anything where you’re resolving what could potentially be a lawsuit, to get the other party to sign a general release of liability. You can find general release of liability form templates on the internet.

Typically in a dispute, both parties may request the other to sign a release of liability, which is  called a mutual release. This should be fine depending on what each party is giving up or what they’re waiving.

It’s very important that when anyone settles out of court with anybody over money, a claim, or a dispute, that the other party sign a general release of liability with a notarized document. So if the other party tries to sue you later, the judge can verify that it was indeed the other party that signed the document and released you from any liability.

It’s also important to be very specific in the release of liability contract as to what is actually being waived. Spell out specifically that they’re waiving their claim against you for a property, a contract, a security deposit, and any and all claims.

Consideration for the Release

In addition to being specific, the release of liability contract should contain consideration for the release. If someone is going to release you from liability, what do they get as consideration or in return for that release? For example, if you pay someone ten dollars to release you from liability, they promise not to sue you for certain things. Make sure you state the consideration in the general release.

Release of Liability for Businesses

Businesses use release of liability contracts to protect themselves from financial responsibility. For example, if you go to an aerobics class at your local gym, the gym has you sign a waiver because if you get hurt, they will not be responsible to pay for your medical bills.

It also allows companies to hire out contractors. When a painting company needs extra workers during their busy season, they’ll hire out contractors and require them to sign a release of liability contract. This releases the company from any financial responsibility if the contractor is hurt or if the contractor damages the property while they’re on the job.

Release of Liability Form

A general release of liability typically includes the following four items:

  • Parties
  • The names of the releasor and the releasee along with their mailing addresses.
  • Liability Event
  • The liability or damages that is being released. It is important that the language in this section is very specific to avoid possible future claims.
  • Payment
  • The compensation that is given to the releasor by the release to waive liabilities or damages. No payment is also an option.
  • Binding Effect
  • This is where signatures are required and makes the contract applicable by law.

Release of liability contracts, or liability waivers, are a must when resolving issues outside of court. It helps avoid lots of liability for future claims that you already thought were previously resolved.

If you or your organization is in need of assistance for a release of liability contract, contact Evisort here.

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