Paying the Price: The Pitfalls of Ineffective Liability Waivers

Liability waivers are common in many contracts between businesses and the general public. Whether the contract covers in-home daycare or bungee jumping, it likely includes language intended to function as a release or a liability waiver that the business owners hope will act as a shield in the event of a lawsuit. Often times, however, poorly drafted waivers include lawyerly language that may appear concrete on the surface but crumbles during a lawsuit. As a recent case involving a fitness studio demonstrates, a poorly drafted waiver can be as effective as having no waiver at all.

Price v. Unverzagt and Associates, LLC

The Price case began with a fitness studio’s offer to provide 10 training sessions for $99.99. The plaintiff, Carmen Price, was enticed by this offer and signed a contract to begin receiving fitness consultation services. The contract stated that Ms. Price agreed to “indemnify and hold [the studio] harmless . . . from any and all claims, demands, actions and causes of action, including personal injury, and all other liability whatsoever . . . .”

Ms. Price suffered an injury while bench pressing when a bar dropped on her head. Price claimed that the injury occurred due to the negligence of her training coach, who was an employee of the fitness studio.

Price sued the fitness studio. The fitness studio won at the lower court based on the indemnity language above. The Court of Appeals disagreed and reversed the district court, holding that, because of the inadequacy of the language quoted above, Ms. Price could proceed with her lawsuit. In other words, the liability waiver was not worth the paper it was printed on.

Liability Waivers in Minnesota

Not all liability waivers fare as poorly as the waiver utilized in the Price case. In one Minnesota case involving another fitness center, the court found that the business was negligent, but it also found that the defendant’s waiver prevented the plaintiff from recovering. This ruling was affirmed on appeal – the defendant won because of its liability waiver. [1]

Despite some waivers being upheld by Minnesota courts, it is important to note that liability waivers are “not favored” by Minnesota courts and will be construed against the party looking to benefit from the waiver.[2] Put differently, a business seeking to use a waiver automatically starts at a disadvantage when facing a lawsuit. Problems with the language of the waiver can be used against the defendant business. This does not mean waivers are ineffective or should be avoided. Rather, businesses that rely on liability waivers should do everything possible to ensure the waivers are drafted to withstand a court challenge. The financial health of the business could depend on it.

Takeaway

The Price case demonstrates the problems a business can face with a poorly drafted waiver. Even if a waiver appears official and lawyerly, it may not actually function as the business intended and may provide little to no protection when a business is facing an expensive and potentially catastrophic lawsuit. The indemnification language in Price may have sounded convincing, but it failed to adequately protect the studio. Businesses that depend on liability waivers should reach out to experienced legal counsel to prepare new waivers or review and revise existing liability waivers.


[1] Johnson v. Fit Pro, LLC, A09 1919, 2010 WL 2899661 (Minn. Ct. App. July 27, 2010).

[2] Yang v. Voyagaire Houseboats, Inc., 701 N.W.2d 783, 789 (Minn. 2005).

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