What is an exculpatory clause?
An exculpatory clause is a written portion within a contractual agreement that relieves one party from liability and, to the best of its ability, prevents that party from being held responsible for damages or harm that has occurred to the other party. They can also be included in signs, advertisements, or other information displaying communication mediums. A common example are the signs in parking garages that advise customers that the company who owns or manages the garage is not responsible for any damage or theft. Disclaimers are one common example of exculpatory language found in agreements and contracts in a range of business activities.
Exculpatory clauses are most commonly used in agreements where a business or service provider comes into contact with the personal property, possessions, or physical well-being of a customer.
Conducting business or work that has closer contact with people and their property than other areas of business can often lead people to be more aware and willing to file lawsuits if harm occurs. Individuals who unfortunately suffer harm to themselves, their family, or their property when conducting business or an activity outside of their direct control will likely want to find another party responsible for the harm and damages. The talented attorneys at the Miami based EPGD Business Law have vast experience in both defending against such claims and creating strong, insightful contracts that protect businesses.
How does an exculpatory clause benefit a business?
An exculpatory clause benefits a business by providing protection against lawsuits that can be ruled against their favor and cause unforeseen expenses. While lawsuits can still be brought against a business entity or individual conducting business through a written contract, a strong and unambiguous exculpatory clause within the contract will limit the liability of the business or individual. Florida case law (law from Florida state court decisions) often shows that clear exculpatory clauses related to the activities that caused the harm to the party bringing the lawsuit will support the court entering summary judgment for the defending party or another favorable outcome. A well written, unambiguous exculpatory clause can also dissuade individuals or businesses from bringing a claim forward if they do not think they can overcome the exculpatory clause. Thus, benefiting a business by preventing unnecessary legal costs and saving both time and resources best put towards advancing the business.
Are there risks to using an exculpatory clause?
There are not direct risks of using an exculpatory clause but businesses need to be careful and aware of how their employees and managers are conducting business to limit potential injuries and liability. Exculpatory clauses should not give businesses a sense of false hope or expectations, especially when instructing employees how to conduct work reasonably and responsibly. Business owners and management should be very aware of potential areas where negligence could occur. If there is an intent to deceive or commit fraud through the use of an exculpatory clause it will be deemed invalid during litigation proceedings.
Exculpatory clauses must be unambiguous and state that the liabilities and risks the business is removing themselves from through the clause. Plus, it must state that the risks and potential liabilities are directly related to the goods and services provided by the business in order for a Florida court to find it legally enforceable.
How to effectively use exculpatory clauses in your business and contracts.
Working with a skilled business attorney will help you maximize the protection and favorable terms of the contractual agreements you need right now or in the future. EPGD Business Law has experienced attorneys that specialize in creating, revising, and reviewing contracts so their terms are most beneficial for your business. The most effective way to use exculpatory clauses is to have them drafted by a skilled and experienced attorney who is knowledgeable about what goods and services the contract is providing for. Communication is an important aspect when it comes to creating contracts. It is crucial to inform the drafting attorney about what your business does and what area there is for potential liability. And remember, exculpatory clauses must be unambiguous and directly discuss the activities which customers and the business are conducting in order to be legally effective.
