Managing risks is something all people do (or hopefully do) whether in their personal lives or business. Especially so, if you engage in or sponsor activities that present a foreseeable risk of harm, such as giving horse riding lessons, operating a race track or allowing neighborhood kids to jump on the trampoline in the backyard. One tool to manage this risk is the use of “exculpatory contracts”. Exculpatory contracts are also known as waivers, assumption of risk agreements or a release of liability. In general terms, these are written documents wherein one party agrees to hold the other party harmless from any claims or not sue as a result of injuries sustained from the activity covered.

In Arizona, exculpatory contracts are enforceable, but they are highly disfavored in the law. They must explicitly and expressly provide in the agreement that the defendant will not be liable for its own negligence and that the parties understood and bargained for the terms of the agreement. The language in the release will be strictly construed against the party seeking to enforce it. Generally, the effectiveness of these types of agreements depends on whether the injury or harm caused by the activity or participation was anticipated. Another exception to the enforce-ability of exculpatory contracts is the “public policy” exception. Public policy may say it is unfair to preclude recovery for injuries. An example of this is in another state, a release agreement purporting to release school districts from liability for negligence as a pre-condition to participating in inter-scholastic athletics violated public policy.

The use of exculpatory agreements is helpful, as it may deter some from bringing a claim or lawsuit. If they do, it will be evidence for the jury to consider whether the injured party assumed the risk of the injuries for which they seek to recover. Thus, the agreement should be broad but yet identify specific risks or possible injuries in Arizona as a result of participating in the activity. As always, “an ounce of prevention is worth a pound of cure”, and you should consult with an attorney on the use of these agreements. We would be happy to discuss these or other agreements with you.