Release of Liability Contracts: Are They Really Worth It?

Content

• What is a release of liability contract?
• When do you need a release of liability contract?
• Are release of liability contracts enforceable?
• How do you effectively manage the release of liability contracts?
• Conclusion

Most business interactions inherently involve risks. Whether providing goods or services, companies might be responsible for losses, damages, or injuries. Identifying these consequences and protecting themselves against them must be a top priority. They can do so by drafting release of liability agreements.

Industries across the world, including real estate, finance, commercial, and health sectors, use these legal agreements to mitigate risks and their repercussions. In this blog post, we will look at how these waivers can protect your commercial transactions, their components, enforceability, and management.

What is a release of liability contract?

A release of liability contract, waiver, or hold harmless agreement protects one party from liability for any harm or losses incurred during a specific activity or event. 

By signing this contract, the parties acknowledge the risks involved and agree not to hold the organizer or provider responsible for any accidents or injuries that may result. The waiver doesn’t exclude any party's willful misconduct or gross negligence. Furthermore, a release of liability only covers likely future events and does not protect against past damages. 

When do you need a release of liability contract?

If something goes wrong in a commercial setting, usually one party has to accept responsibility. That is why businesses use a release of liability agreement before providing goods or services that involve risks. It protects them from legal, financial, and reputational repercussions. When there is a high chance of injury or damage, these waivers can shield parties from claims arising from the incident.

1. Organizing Events and Activities

If you’re hosting an event, especially one involving physical activities like sports, adventure camps, or workshops, it’s vital to have participants sign a release of liability. This protects you from lawsuits related to injuries that may occur during the event. 

2. Recreational Services

Businesses offering recreational services—such as gyms, yoga studios, or adventure sports—should require clients to sign a release of liability. This helps mitigate the risk of claims arising from accidents during their services. Especially for high-risk activities such as bungee jumping, skydiving, and rock climbing.

3. Rental Agreements

When renting equipment (like boats, bicycles, or sports gear), it’s wise to include a release of liability in your rental agreements. This ensures that renters acknowledge the risks associated with using the equipment and agree not to hold the rental company responsible for any injuries.

4. Sports and Fitness Activities

Sports leagues, fitness classes, and coaching services should utilize the release of liability contracts. Before engaging in any activities, participants must be aware of the risks involved. While most physical activities don’t mean harm, there’s always a possibility of injuries, cardiac events, and other risks.

Are release of liability contracts enforceable?

The enforceability of release of liability contracts can vary based on several factors, including jurisdiction, essential elements, the specific language of the contract, and the circumstances surrounding its signing. For example, the release of liability contracts does not protect if a customer is hurt by malfunctioning equipment in the gym. So they’re not legally enforceable in all situations.

Different states and countries have varying laws regarding the enforceability of liability waivers. In some jurisdictions, courts may be more willing to enforce these contracts, while in others, they may be considered against public policy, especially if they attempt to waive liability for gross negligence or willful misconduct. For a release of liability contract to be enforceable, it must be written in clear and understandable language. Ambiguous terms or complex legal jargon can lead to disputes over the contract’s meaning and its imposition.

How do you effectively manage the release of liability contracts?

A release of liability contract must specify the terms and conditions between the releasor and the releasee. There must be an offer, acceptance, and consideration to be legally enforceable. It all starts with drafting contracts that are competent and legally binding. The agreements must go through relevant reviews, approval, and signing. Traditional and manual methods can make the contract management process time-consuming and inefficient. New-age solutions with the capabilities of AI, OCR, and automation enable businesses to create and manage the release of liability contracts with utmost precision.

Contract Drafting

Release of liability contracts should be written in clear, understandable language. Businesses must avoid legal jargon whenever possible, as this can confuse all parties involved. However, drafting contracts from scratch can take hours, sometimes even days. Pre-written templates provide a solid foundation, allowing you to fill in the blanks and customize key details without starting from zero. It can drastically reduce the time spent on contract creation, enabling you to focus on other critical aspects of your business.

Using templates ensures that your contracts maintain a consistent structure and terminology. By utilizing pre-written templates, businesses can significantly reduce legal costs while safeguarding their interests. This is particularly beneficial for small and medium-sized enterprises (SMEs) that may not have the budget for extensive legal services.

Description of Activity: The contract must specify the activity or event for which the party requires protection in the case of damage or injury.

Release Clause: The provision stating that the parties hereto accept the release of liability forms the basis of the legal agreement.

Indemnification Clause: The terms convey that the releasor agrees to indemnify the releasee for any lawsuits arising from the claim.

Acknowledgment of Risk: The releasor must acknowledge the risk associated with the activity or event and be ready to accept it.

Approval

A release of liability contract must go to relevant stakeholders for review and approval. Manual methods or email chains can delay the process. Moreover, it is challenging to keep track of all the parties and their recommendations. 
Fortunately, automation can go a long way in streamlining the contract lifecycle.

Businesses can utilize automated workflows to route the drafts through relevant reviewers and approvers. Parties can effortlessly collaborate on the contracting process without errors or hold-ups. They can track the progress and receive real-time document status at every stage. Thus, organizations can take proactive steps to eliminate risks before they escalate.

Execution

All the involved parties must sign and execute the release of liability contract for it to be legally binding. Paper contracts and wet signatures can complicate the matter. However, more and more organizations are shifting to electronic signatures to accelerate the process. 

These legally binding and secure solutions allow for remote signing anytime, anywhere. They can standardize and automate workflows to get the legal agreement to the appropriate party. Thus, they can execute and enforce the release of liability contracts in no time.

Storage

A well-written agreement helps parties prevent non-performance, compliance issues, and disputes. Hence, all executed contracts must be readily available to the stakeholders throughout the contractual relationship. Storing legal documents across folders and drives can affect accessibility and transparency. 

Digital repositories provide a searchable and secure location to store contracts and related documents. It enables parties to easily track performance, compliance, and milestones. They can gain insights to improve the contracting process. It also provides a standard template for future liability needs. 

Monitoring

Businesses must stay on top of the release of liability agreements to keep track of performance, deadlines, and milestones. While spreadsheets and calendars are popular choices for tracking contracts, they have limitations. It is impossible to scale or guarantee error-free results with these outdated methods. 

Automated reminders for renewals, terminations, and payments allow parties to comply without constant intervention. They can utilize advanced reporting capabilities to identify and monitor KPIs. Analytical insights into the contract ensure they adhere to legal, organizational, and industrial standards. Even with expanding portfolios, businesses can avoid the legal consequences of neglected contracts.

Conclusion

The release of liability contracts transforms how firms manage risks and their implications. A well-oiled system for drafting, negotiating, and executing these legal agreements enables parties to stay ahead of the game. Dock 365, an all-in-one contract management software, can help with that.

Our AI and Microsoft 365-driven platform provides an array of tools to streamline the contract lifecycle. With little effort and utmost efficiency, parties can draft, review, negotiate, execute, and manage all kinds of legal agreements. They can gain real-time insights, timely reminders, and a comprehensive overview to make contract management a breeze.