Magic Language in a Contract That Can Waive Your Right to Sue Your Health Club or Landlord

One of the common complaints about lawyers by the public is that “legalese” makes it impossible to understand the clear intent of parties to a contract.  The public believes that “magic language” exists in contracts and that failure to comply with makes a contract invalid or a will have no effect.

This type of belief is not good for the legal justice system.  There is a movement to make the law more accessible for the public at large.  For example, jury instructions are being modified to “clear language” for jurors.  Small claims courts do not require an attorney to represent a party.  And there is more.

But, there are times when strict adherence to precise language is still necessary for a contract to have effect under Indiana law and one of those situations involves “waiver of the right to sue” often found in leases and other membership contracts.

In those situations, Indiana law is clear — the drafter of the contract must follow specific language in order to prevent a person injured by the drafter’s negligence to have been considered to “waive” or give up the right to sue.

These clauses are called “exculpatory clauses.”  While valid under Indiana law, they are generally disfavored when it comes to waivers of negligence claims by injured persons.

In short, each exculpatory clause must specifically refer to  the Defendants’  “own negligence” as the thing being waived.

“Under Indiana law, waivers containing exculpatory clauses absolving parties of liability for the own negligence must be specific and explicitly refer to waiving that party’s negligence.”  Anderson v. Four Seasons Equestrian Center, 852 N.E.2d 576, 584 (Ind. Ct. App. 2006).

Indiana law is clear on this issue:  for any exculpatory clause to absolve the drafting party from liability it must “specifically and explicitly refer(s) to the negligence of the party seeking release from liability.”  Marsh v. Dixon, 707 N.E.2d 998 (Ind. Ct. App. 1999).  If the drafting party merely mentions “damages” or “injury” or “losses,” that is not a valid exculpatory clause.

In Marsh, the defendant was an operator of a carnival-type ride that used a trampoline and forced air. The ride would shoot persons 3-4 feet into the air with forced gusts of wind.  On one particular afternoon, the ride malfunctioned and a rider was shot 15 feet into the sky and when the ride failed, they came crashing down onto the ground and were injured.

After a patron/rider was injured while using the trampoline, the defendant argued plaintiff had waived any claim for negligence based upon a contract that read (in pertinent part):

“I hereby fully and forever discharge and release Dyna-Soar Aerobatics, Inc. and all of the partners, directors, officers, employees, and agents for the aforementioned companies from any and all liability, claims, demands, actions and causes of action whatsoever arising out of any damages, both in law and in equity, in any way resulting from personal injuries, conscious suffering, death or property damages sustained while flying Dyna-Soar.”  (Id.)

The Marsh Court ruled:  “(o)bviously, the release fails to specifically and explicitly refer to Dyna Soar’s own negligence.”  (Id.)  Consequently, the Indiana Court of Appeals ruled that Marsh had not waived the right to seek damages based upon the negligence of Dyna Soar due to the exculpatory clause language.  The ruling was based upon the principle that an agreement to release a party from its own negligence must “clearly and unequivocally manifest a commitment by (the plaintiff) knowingly and willing (sic) made, to pay for damages occasioned by (the defendant’s) negligence.”  Id. citing Indiana State Highway Commission v. Thomas, 169 Ind. App. 13, 346 N.E.2d 252, 260 (1976).

It is common to find exculpatory clauses in leases for land, especially in the commercial context between businesses and landlords.  While those clauses are explicitly allowed by Indiana law, there still must be the “magic language” in that contract before a court will deny an injured person the right to sue the landlord.