An exculpatory clause is a provision in a general contract that relieves an individual of any liability should there be any damages that may occur within the duration of the execution of the contract. Typically, the contract party who issues an exculpatory clause is the one who wants to be relieved of any potential responsibility that may arise in the future.

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However, even if a party issues this clause in the simple contract, the court can choose to deny it to them depending on the subject matter or issue that the clause contains. If the clause is sought to eliminate any liability even those that are caused by personal negligence, the court may not approve it.

An exculpatory clause can often be found in where the first party is a service provider that will have inevitably come into contact with a customer who, in this case, is the second party. Any interaction is considered to be covered by this clause, such as being face-to-face with the personal property or possessions of the customer, or being in charge of his physical well-being or overall safety.

You might think that you’re not familiar with the exculpatory clause but it is actually quite common. If you’ve ever been in a restaurant or a simple fast-food chain, you may have noticed signs that tell you to take care of your belongings since the establishment will not be made responsible for the items that you will lose while inside their premises.

These are also present in overnight parking lots where the management informs the customers ahead that he will not bear the burden should the vehicles be damaged while inside their jurisdiction. These cases are some of the more common examples of instances where the provider of the service has already cleaned his hands from the grime that loss or damage, among others, may bring to his business. You may also see subordinate clause examples.

Exculpatory Clause Definition

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Example of Exculpatory Clauses in Leases

Are Exculpatory Clauses Enforceable?

The general, unwritten rule tells us that exculpatory clauses are enforceable, even those that are not legally structured through standard contracts between a customer and a business, or a landlord and a tenant. However, historically, this has not always been the case.

The court used to frown upon this particular general clause since they firmly believed that people must be held responsible for wrongdoings that were done under their supervision. They believed that no one should be able to escape liabilities for a misconduct.

But times have changed and, depending on the state’s laws, exculpatory clauses are now respected by the court. But this clause does not make the party who issues it wholly insusceptible to blame since the clause has limitations. You may also like conditional sentence examples.

General Exculpatory Clause Example

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The Limitations of Exculpatory Clauses

As we’ve already discussed, exculpatory clauses are considered enforceable. Which means that if you lose your wallet in a public diner whose management has issued an exculpatory clause, you can force them to pay an equivalent amount of what you have lost. However, there are certain loopholes to this immunity. You may also see adjective clause examples.

1. If the exculpatory provision/clause is ambiguous. 

Like every properly written contract, an exculpatory clause needs to be specific. It has to precisely state the rights that the person who agrees to the provision is waiving. There should be no space for questions or guesses within in the clause, in terms of language and conditions. The court will have to examine the clause anyway so that ambiguity can be removed, should there be any. You may also like dependent clause examples.

The main point is that the parties that will be affected by the exculpatory clause know exactly what they are getting themselves into and what rights they are renouncing.

2. If the loss or damage is caused by deliberate acts.

Of course the court will consider the root cause of the situation. If it was the product of gross negligence, willful actions, or simple utter disregard for the other party’s well-being, or anything similar, the court may invalidate the power of the clause. You may also check out adverb clause examples.

3. If the loss or damage is caused by fraudulent acts. 

There may be instances wherein the situation is caused by an employee’s unlawful activity (such as theft), the court may choose to invalidate the exculpatory clause. But not all acts of deception can be considered a fraudulent act. For cases like that, the establishment in question may still be held liable but not because of fraudulent acts. You might be interested in relative clause examples.

A deed can only be considered fraudulent if the business has lied about an important detail in the transaction, the business has intended to deceive the customer by stating a false fact, the client relied on the false statement, and the client has experienced a loss or a damage because of reliance to the false statement. You may also see what is an example of a dependent clause?

4. If it contradicts public interest.

The court will take the interests of the public into a bigger consideration, so if the clause is against any public policy, the court can decline its enforcement. For these cases, the judge simply treats the clause as if it is not present in the document, and simply proceeds with the case. You may also like compound sentences – writing methods & examples.

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Exculpatory Clauses in Business Contracts

For cases where the exculpatory clause is a part of a business contract, before you agree to one, make sure that you understand the laws of the state to which you are a part of to know the factors that could make the clause enforceable. It would also help if you had a legal attorney present. You may also see complex sentences examples.

Aside from that, make sure that you understand everything in the clause, particularly about the rights that you are giving up by signing the agreement. This is a complex situation and rash decision-making won’t help you in this one. You may also like balanced sentences examples.