It’s a bustling time of year - the two week countdown until holiday break has begun and for fitness facilities and studio owners around the country, this also marks the countdown to the busiest time of their fiscal year. A whirlwind of new clients will swarm starting in January to satisfy their New Year’s resolutions, which will undoubtedly include making this year a healthier year. I would challenge each studio owner and fitness facility to similarly develop a set of New Year’s resolutions for their business – what will make you a more lively, successful, and flourishing organization?
One item that you could and should get crossed off this list before the New Year is an analysis of any form documents that may need to be revisited, including one of the most important in protecting your business, your liability waiver. In our experience, this tends to be often overlooked until something tragic happens and the purpose of this article is to simply say - there is no time like the present to take a few simple steps to help safeguard the health of your company. The timing is also quite perfect for this because for new clients, this will be the first time being presented with your revamped form and, for existing clients; it tends to be a practical statement to say “everyone is required to resign the 2016 waiver that is now in place”.
Overview of Waivers
A waiver is a form used by companies (or in some cases individuals) to protect themselves from being legally accountable for injuries that arise out of the known and unknown risks in an activity. The premise of a waiver is rooted in the concept of a participant’s “assumption of the risk” and to this end, serves two primary purposes. First, a waiver provides a written record of the facility warning participants of the inherent risks of the activity. Second, as a waiver is a contract, it provides exculpation of simple negligence on the part of your business or agents. It is important to note that a waiver does not protect against fraud, gross negligence or willful and reckless conduct. In sum, if a participant is aware of the potential risks of an activity and by contract, forfeits their right to legal action to collect damages in the event that they are subsequently injured, then in essence they are assuming the risk.
Enforceability of Waivers
As mentioned above, a waiver is a contract between the organization and a consumer and thus the enforceability of a waiver is rooted in contract law, which is why it is important that the waiver is well drafted. Any ambiguity in the waiver will be construed against the drafter. Further, contract law is a state law concept and thus an analysis of the enforceability of a contract will vary from state to state. Generally speaking, a waiver or release of liability will held to be enforceable if three conditions are satisfied.
- The injury of the participant arises from risks that are stated in the waiver or from the organization’s simple negligence (which has been specifically waived in the document);
- The waiver is properly drafted according to the law of the state in which the organization is located (or if the organization is national, the law of the state that was agreed to in the waiver/release);
- The waiver does not violate any state laws of public policy (some states, such as New York, severely limit the enforceability of waivers on the premise that they are unconscionable in certain instances).
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Important Provisions to Include:
The waiver should begin by clearly stating that “this waiver/release is being given in consideration of the participant being allowed to engage in the activity”. A waiver will not be held to be an enforceable contract without all parties receiving consideration (something of value). The fitness facilities’ consideration is the participant’s promise not to sue and in return, the participant is receiving the right to partake in the activity.
As mentioned above, one of the purposes of a waiver is to have a written record that the organization informed the participant of the risks involved with the activity, thus relying on the assumption of risk defense in the event there is an injury. As such, it is important to specifically include a warning of all of the possible injuries that may occur, including, the possibility of “serious or grievous bodily injury, disability and/or death”. While such extreme outcomes are often highly unlikely, these are often the flukes that lead to a major lawsuit. Additionally, this provision should include “unknown risks” that are inherent in the activity. This is essentially a catch-all for the specific risks that may be overlooked because of their unlikeliness. Last, the release should specifically state that the participant understands all of these possibilities and specifically assumes such risks.
Representations and Warranties
The waiver also should include a section whereby the participant represents certain things such as that he or she (1) does not suffer from any limiting health condition, (2) that the participant understands and acknowledges that the activity or workout involves strenuous physical activity and that physical injury (and the risks from the section above) can occur as a result of the participating in the activity, and (3) has read the release/waiver and understands the document and the terms contained in the document and is not signing this agreement under duress, coercion or undue influence. I have encountered questions regarding the issue of whether the fact that the existence of unequal bargaining power can be a defense for a participant since the waiver/release is required in order to participate in the activity. Courts have generally held, in the recreational activity context, that participants are free to not sign the waiver and take their business elsewhere. This differs from other contexts (such as an employment relationship) where a state has more incentive to protect an individual.
After establishing consideration for the contract, setting forth representations of the participant, and warning of the known and unknown risks of the activity, the next essential potion of the waiver is the specific release language. There are two important concepts that need to be included in the release language. The first is that the correct parties are released, which should include the organization as well as its “employees, independent contractors, assigns, affiliates, representatives, successors and assigns”. This ensures that the organization and all parties that may have direct contact with the participant are properly exculpated. Second, the language should state that the participant “releases and forever discharges the organization from any and all claims, demands, injuries, personal injuries or causes of action arising from or out of the Participant’s involvement in the activity”. This makes it clear that the parties intended to fully release the organization.
5 Pitfalls to Avoid in Drafting Waivers
Just as important as the provisions that should be included, are the common mistakes that we tend to see in the form waivers we review. Below are 5 common pitfalls to avoid:
- The Waiver should be a separate document. Do not try to combine the waiver with another registration form for participants. Remember, if the waiver is challenged, you will be arguing that the participant assumed the risk and you do not want to face the argument that the waiver language was buried in a multitude of documents and thus the participant did not fully grasp what they were signing.
- The location and size of the exculpatory language is important. The print or type should be large or in all caps and should stick out to the reader.
- Each participant should individually sign their own waiver. Even if you are conducting a class for a group of individuals, do not assume that the head of the group has the capacity to sign on behalf of other participants.
- The wording in the waiver should be clear and unambiguous. This advice may seem odd advice coming from a lawyer, but legalese is not the right approach for this document. Rather you need simple language that is easily understandable by the average person. Where a lawyer can be useful in drafting a waiver is the knowledge of exactly what should be included and the specific state laws that govern.
- The waiver should not attempt to release the organization from gross negligence or other outrageous conduct. It should only disclaim responsibility for risks associated with the activity and simple negligence. All states will agree that an overly broad contract will be unenforceable as against public policy.
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Overall waivers are essential to protecting your business. Unfortunately, we often see cases where fitness facilities and studios are forced to deal with lengthy and expensive lawsuits that could have been mitigated with this simple risk management tool. As noted throughout the article, a waiver or release is a contract under the law and as a part of this contract, a participant is giving up considerable rights. As such, a waiver, customized for your organization is imperative to (a) demonstrate that the participants who are signing these contracts understand the provisions and (b) ensure that your waiver is in compliance with applicable state laws. Start out the year of 2016 right with taking a deeper dive into the potential issues with your current waiver form and engaging in a revamp if needed!
Cheers to a new year, and one less thing to fear!