Our clients sometimes find themselves in actual or threatened disputes that expose them to liability.  In many situations, clients prefer to settle such disputes amicably, rather than asking an arbitrator,  judge or jury to decide the matter for them. In order for a settlement to offer protection from liability,  it is crucial that it is documented by a signed “general release” (meaning a release from all claims)  from the other party. We dissect a simple General Release Agreement below to reveal its essential  elements. The text of our sample General Release Agreement is at the end of this article.

  • The Payment. The first sentence of this General Release Agreement (reference *A* in the text  below) recites the “consideration,” or the amount of money that the released party will pay to  the releasing party to secure the release. In addition to or in lieu of monetary consideration,  the settlement can include non-monetary aspects such as return of property or promises to  do or not do a specified act. Often, the consideration includes mutual general releases in  which each party agrees to release the other from liability. The consideration for the release  normally is the key issue in settlement negotiations.
  • Who Will Provide the Release? Disputes can be among individuals or entities, or a combination  of both. Obtaining a release from only the specific individual or entity with whom you have a  dispute may be insufficient. From an individual, you may want to obtain a release on behalf of  his or her successors, heirs and assigns in the event the individual dies or has assigned the  claim. With an entity, you may want a release from the entity’s owners, subsidiaries, affiliates,  officers, directors, employees, agents and/or other related individuals or entities. The language  in *B* and/or *C* in the text below provides examples addressing these issues. These lists  are not exhaustive, and should be tailored to the specific circumstances. Note that if you are  receiving the release, you would prefer to have all parties giving the release sign the General  Release Agreement. If that is not feasible, you can include in the General Release Agreement  a representation and warranty from the person signing the General Release Agreement: “The  person signing below represents and warrants he or she has the power and authority to enter  into this General Release Agreement and provide the releases set forth herein.” While this isn’t  as good as having all Releasors sign, it will give you a claim for breach and indemnity from  the person signing the General Release Agreement if one of the non-signing Releasors sues  you. If you are giving the release, it is preferable to limit the persons providing the release (the  Releasor) to you alone. If you are receiving a release (the Releasee), you would like it from  the broadest group possible.
  • Who Will Receive the Release? The rationale that applies to defining the “Releasor” as  described above also applies to the definition of the “Releasee” – the persons and entities  August 2014Limiting Your Liability: Protect Yourself with a Well-Written General Release |  2 being released. If the person being released is an individual,  he or she will want to include their related parties listed in  *D* below in the release, and if it is an entity, it would want  to include its related parties listed in *E* below. Again, if you  are giving the release, you would like to limit the persons  being released to the fewest possible, and perhaps only to  the individual or entity involved.
  • What Claims Will Be Released? If you are the “ Releasee,” you  will want the description of the claim to be released to be as  broad as possible. In this sample the “release” shown in *F*  below is “of and from any and all claims … which Releasor s or  any of them own or hold or have owned or held” –  a release  of all claims existing as of the date the Release is signed. The  sample language at *G* provides examples of claims that are  released with the introductory language of “including, but not  limited to,” but those are only examples and are not limitations  of the overall general release. Examples of descriptions of  such claims include: “the accident that took place on March  13, 2014 at 123 Elm Street, San Francisco, California” or “all  of Releasee’s obligations under that certain contract entitled  Supply and Distribution Agreement and dated January 1,  2014” or “any claims of easement onto, across or over that  certain property located at 456 Maple Drive, New York, NY.”  If you are the “Releasor,” then you would like the release  as narrow as possible, and you would substitute the word  “arising out of” for the words “including, but not limited to, all  matters constituting, concerning, in connection with, relating  to, and/or arising out of” in the sample and put in a precise  description of the claim released. In that case the release  might end like this: “ … which Releasors or any of them own  or hold or have owned or held, arising out of the accident  that took place on March 13, 2014 at 789 Birch Street,  Washington, D.C.” Temporally, a general release normally  covers only claims that exist as of the date of signing the  General Release Agreement, and not future claims that ar ise  from events after that date.
  • Representations and Warranties From the Releasor. The  provisions referenced as *H* below outline some basic  representations and warranties a person or entity being  released would want: that the Releasor owns the claims, has  the power and authority to release them, has not assigned  the claims, and will not sue on the claims, as well as that the  Release Agreement contains the entire agreement between  the parties concerning the matter.
  • Agreements Concerning the Release and Claims Released.  The provisions referenced as *I* below represent some basic  agreements a person being released would want: that the  Releasor will withdraw or dismiss with prejudice any claims  or reports that have been made as to the released claims,  and will keep the claims, release and all facts involved in  strictest confidence, and that providing the release is not  an admission of liability. Other agreements that sometimes  are included are an agreement to arbitrate disputes related  to the Release Agreement, a reference to a specific state’s  law that will apply in interpreting the Release Agreement,  an agreement not to assist others in bringing any released  claims, and an agreement to keep the Release Agreement  confidential. These clauses and the Release Agreement need  to be crafted carefully based on the specific fact situation. For  example, an entity that will be fundraising might not be able  to give a blanket confidentiality clause since it will need to  disclose material information to potential investors.
  • Future Attorneys’ Fees. The American Rule on attorneys’ fees  is that each side bears its own attorneys’ fees in litigation or  arbitration, unless a contract or statute provides otherwise (in  the English Rule, the loser pays the winner’s attorneys’ fees  regardless). The provisions referenced in *J* below provide  for the loser to pay the winner’s attorneys’ fees if there is a  dispute over the release. This is especially important if you  are receiving the release. For example, if you pay US$1000 to  settle a fender bender using the sample Release below, and  the Releasor sues you anyway, or assigns his or her claim  to another who sues you, you can have the claim dismissed  and recover your attorneys’ fees as well.
  • General Release. Under some states’ laws (New York and  Delaware), a general release of claims will release all covered  claims, even those that are unknown or unsuspected by the  Releasor. Other states’ laws (California) provide that a general  release only releases claims that the Releasor knows or  suspects exist in his or her favor. In order for the Releasor  to grant a “general release” of known and unknown claims  and suspected and unsuspected claims in California, the  Releasor must expressly waive the provisions of Section  1542 of the California Civil Code. In California and other states  with similar statutes, it is important that the General Release  Agreement contain at least the language as referenced in *K*  below. Laws on Release Agreements vary from state to state,  and counsel in the relevant state(s) should be consulted to  assure compliance.

In summary, while every situation is different, and requires a  careful analysis of the appropriate type of release language to  use, we have found that the simple General Release Agreement  below is a useful starting point.

Click here to view General Release Agreement.