Hold Harmless / Release Contracts - An Update


I previously wrote about the law of hold harmless or legal release contracts in Illinois, but an update of recent court cases is timely. The general rule has not changed. Illinois views such agreements as valid and legally binding, under the public policy of allowing freedom of contract.  But because Illinois also has a strong policy that a person should be liable for their own negligence, courts strictly construe such contracts against the benefitting party, and carve out some exceptions to enforceability.
Generally a release is enforceable if (1) its terms are clear, explicit, and precise; (2) the release language (sometimes called the "exculpatory clause") encompasses the activity, circumstance, or situation contemplated by the parties to relieve the defendant from a duty of care; (3) it is not against settled public policy; and (4) nothing in the "social relationship of the parties militates against upholding the agreement."

Regarding the final factor, contracts between employer and employee, and between the public and "those charged with a duty of public service, such as a common carrier, innkeeper, public warehouseman or a public utility" have been found invalid.  Illinois courts have also found release agreements invalid where the contract is the result of a disparity in bargaining power between the parties, noting such factors as (1) the sophistication of the contracting parties, (2) whether the plaintiff was or should have been aware of the risks involved in the activity; (3) whether the plaintiff was under economic or other compulsion to agree to the release; and (4) whether the plaintiff had a reasonable alternative.

In Spears v. Assoc. of Illinois Electric Cooperatives, 2013 IL App (4th) 120289, the appellate court considered a certified question as to a release between a student and an organization teaching a training course for a community college.  The certified question sought clarity on whether this situation should categorically be deemed a disparity of bargaining power, and thus the release unenforceable.  The appellate court noted that some other States have made such a categorical determination, but ultimately found the facts in the record unclear as to relevant issues that would go towards the issue, and so remanded to the circuit court for further proceedings.  Although the question was left unanswered, the case presents a helpful synopsis of the law on this issue.

In Hawkins v. Capital Fitness, Inc., 2015 IL App (1st) 133716, the appellate court considered a unique claim involving an injury at a gym / health and fitness club and the club's standard release.  The injury involved a mirror falling on the plaintiff.  Although the release was broadly written, the court found the "falling mirror" injury was not reasonably foreseeable when the release was signed, nor did the release specify such a risk in the express wording.  For these reasons, the court found the release did not cover this particular injury, and reversed a summary judgment ruling for the health club.

Finally, in Hussein v. L.A. Fitness International, LLC, 2013 IL App (1st) 121426, the appellate court considered a tragic weightlifting accident that rendered the plaintiff a quadriplegic. First the court noted the  signed release stipulated to Minnesota law being applicable, and the court found that to be enforceable, while noting it appeared Minnesota law reflected the same view as Illinois on this topic.  The court then found the accident to be reasonably within the foreseeable events contemplated by the release, and affirmed the dismissal of the case.

All of this demonstrates the value and legal power of a well-written release/ hold harmless agreement.  Broad, "catch all" language is not necessarily enforceable, so it is worthwhile to carefully consider the wording that is most appropriate for the specific circumstances.

Comments

Popular posts from this blog

Public Insurance Adjuster Contracts and New Licensing Requirements

Illinois New Minimum Wage Law - Business Owners, Be Aware!

Who Owns a Joint Bank Account When One Account Holder Dies?