There are many times consumers are asked to sign a release of liability before using a product or service. These releases of liability are then thrown back at the consumer when the consumer is injured because of the negligence of the business, its employees or other agents. Often the releases provide for a release of claims even for the business’ own negligence. New Mexico courts will enforce these only in limited circumstances.
Strict Rules of Construction on Release Agreements
In fact, the court has set forth a number of rules and guidelines regarding the enforcement of these releases. The first rule is that the any such agreement between a business and a consumer will be strictly construed against the drafter of the agreement. In other words, where there is any doubt as the agreements terms or enforceability, the courts will favor the consumer over the business that created the release agreement.
In the seminal 2003 case of Berlangieri v. Running Elk Corp., the New Mexico Supreme court addressed the enforceability of liability releases in the context of horseback rides. The court first addressed broadly whether these liability releases in consumer contexts should ever be allowed. As with most if not all U.S. courts, the court would not accept a categorical prohibition on liability releases. The court reasoned that tort policy and protection of the public, should not completely override freedom of contract.
Balancing of Tort Policies v. Freedom of Contract
Although the court would not adopt an absolute prohibition on these liability releases, it did determine that they should be enforceable only within strict limits with the balance in favor of protecting the consumer. The Court began its analysis with the age-old doctrine that contracts should be strictly construed against the drafter.
Contracts to be Strictly Construed Against the Drafter
The court stated just that when it said that “exculpatory clauses are construed strictly against the drafter.” One very important aspect under this rule is that the release be very specific in what protections the consumer is waiving. This means the substance and wording should be clear and complete. After all, it is hard to say a person consented to terms which were not clearly stated and fully disclosed. This suggests that when a release against the business relieves the business from liability for its “negligence”, the first question for a court is “negligence from what”? A blanket general release for negligence would not seem to meet this specificity requirement.
Non-Exclusive Factors Set forth by the Court
The first rule of construction, interpretation against the business (drafter) in favor of the consumer is mandatory and reflects centuries of legal progress for the protection of the public at large. The court also set forth 6 non-exclusive factors mentioned above:
- The business is subject to government regulation.
- The service is important to the public and is a practical necessity for some
- The service is generally available to the public
- The business has a decisive advantage of bargaining strength
- The release is non-negotiable and there is no option to pay more to limit it.
- The release places the safety of the consumer under the control of the business, subject to the negligence or carelessness of the business, its employees or agents.
None of these factors must be present. It may be that any one of the factors standing alone is sufficient depending on the circumstances. In fact, the court states the factors as non-exclusive which seems to leave open the possibility that none must be present at all. This in turn suggests that other factors not stated in the court’s opinion may also be sufficient for voidance of the release. This of course, if allowable at all, would be highly dependent on the situation.
In sum, liability releases are not favored by the court. They will be enforced under strict limitations. There remains a strong public policy for protecting the public over these one-sided release agreements. On the other hand, when a consumer is injured or killed by the negligence of a business that has a liability release in hand, the business and most importantly its insurer will fight to enforce it tooth and nail.