The Value of a Well-Drafted Release or "Hold Harmless" Clause for Non-Profits

The legal "Release" is a document by which one agrees to "release from" or waive liability from another, potentially even if the liability results from the released party's own negligence.  A broader contract will often contain a release provision, sometimes called a "hold harmless" clause.  The Release is an essential part of countless contractual documents.  In fact, one could argue that a Release should at least be considered as a part of any contract.

Two recent Illinois appellate cases (both out of the First District) provide good examples of how courts analyze a Release, both in the context of personal injury claims involving not-for-profit, charitable activities in which an accident occurred.  The cases are sobering reminders that without the proper legal documents, charitable organizations and other parties involved in an event can be held liable  for injuries that occur despite the best of intentions or the unquestioned good of the cause supported by the charitable event.  Fortunately for the Defendants in these cases, they had prepared and required the proper Release documentation in advance, and thus were not held liable.

Illinois law has found that a Release is a valid and enforceable contract, so long as there is no fraud or willful or wanton negligence, unless (1) there is a substantial disparity in the bargaining position of the parties; (2) upholding the Release would violate public policy; or (3) there is something in the social relationship of the parties that militates against upholding the Release.  If enforceable, release of liability provisions are strictly construed against the party they benefit.

In Hellweg v. Special Events Management, __ N.E.2d __, No. 1-10-3604 (Ill. App. 1st Dist. July 8, 2011), the plaintiff was a participant in a charitable bicycle race event, but was injured in a warm-up session when a non-participating bicyclist entered the course (advertised as a "closed course") and collided with the plaintiff.  Although the plaintiff acknowledged having signed a Release, he argued that the specific collision was not foreseeable, and therefore the Release was unenforceable.  The court cited case law that the specific injury occurrence need not have been precisely contemplated in the Release; it is sufficient if the "injury falls within the scope of possible dangers ordinarily accompanying the activity and, thus, reasonably contemplated by the plaintiff."  The court then closely reviewed the language of the Release and found that this injury was reasonably contemplated, and therefore the Release was upheld and the defendants were released from liability.

In Johnson v. The Salvation Army, __ N.E.2d __, No. 1-10-3323 (Ill. App. 1st Dist. August 12, 2011),  the plaintiff had voluntarily participated in the defendant's drug and alcohol rehabilitation program, which included a "work therapy" component.  Plaintiff was injured when he fell out of a moving vehicle while riding with another to pick up and deliver donations.  Although the Plaintiff acknowledged signing an agreement containing a release or "hold harmless" clause after having this agreement read aloud to him, he nevertheless argued that the Release was unenforceable as against public policy and due to a disparity in bargaining position.  Regarding the former, Plaintiff argued that he was  "akin" to an employee of the Defendant, which is one of the bases for finding the document against public policy.  The court rejected these arguments and upheld the Release, finding that the relationship between the parties was that of a "beneficiary and [a] charitable organization," that Plaintiff voluntarily chose to enter the rehabilitation program, and had entered the agreement containing the Release of his own free choice.  The court further found that the Release was "clear and unambiguous and reasonably included the occurrence of Plaintiff's injury."

In both of these cases, the Defendants were protected and saved from liability by the legal Release, drafted to fit the circumstances involved and signed by the releasing parties in accordance with the law.  What about your organization?  Are you protected if the same happened to you?

Nate Hinch is an attorney and partner at the law firm of Mueller, Reece & Hinch, LLC.  He has offices at 404 N. Hershey Road, Suite C, Bloomington, IL 61704, and 809 Detweiller Drive, Peoria, IL 61615, and can be reached by phone at (309) 827-4055 and email at nhinch@mrh-law.com.

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