What is a Liability Waiver or a Release Form?

Release forms may lower risk

Four children on ponies, side by side

Does your business offer services or sponsor activities that could cause injuries to customers or participants? Examples are horseback riding lessons, aerobics classes, and a bicycle race. If your company engages in such activities, your insurer might refuse to issue a policy unless you use release of liability forms (also called liability waivers).

What is a Release of Liability?

A release of liability form is a contract between your business and a customer, client, or participant. By signing the form, the customer or participant agrees that he or she understands and accepts the risks associated with the activity. This person also agrees to waive his or her right to file a liability claim against your company for any injuries sustained from the activity.

Release of liability forms are intended to limit the number of negligence suits filed by patrons against your business. You should consider using these forms even if your insurer does not require them. They can help protect your firm against costly lawsuits.

Myths About Release Forms

As a business owner, you may have heard these myths about liability waivers:

A patron who has signed a waiver can't sue me. A liability waiver may not prevent an injured party from suing you. The waiver simply shifts some liability for injuries from your business to the injured party. A waiver may release you from ordinary negligence claims, but it does not eliminate the right to sue. Patrons can still sue for gross negligence and intentional torts.

Note that minors cannot release liability. Thus, releases will not be enforced against those under the legal contract age. Minors' parents and guardians (and no one else) may release liability on their behalf.

I don't need to file a claim with my liability insurer about the accident. The customer signed a release before he was injured so I don't have to worry about a suit. I'll just send a copy of the release to the customer's lawyer. You should report any occurrence or claim to your liability insurer even if you have obtained a waiver of liability from the injured party. Include a copy of the waiver form with your report. Don't try to handle the injury or claim yourself.

I don't need insurance if I use release forms. A liability release form is not a substitute for commercial liability insurance. It can head off some lawsuits but will not prevent all of them. A customer who has signed a waiver may still file a claim. Moreover, lawsuits can arise from activities not covered by the waiver. Remember that release forms should be used in addition to, not in place of, general liability insurance.

Enforceable Release Forms

A release form is of no use to your company if it isn't enforced. The laws regarding releases vary by state. Some states have strict standards and will enforce releases only if they meet specific requirements. Some have loose standards while others fall somewhere in the middle. A few states don't enforce liability releases at all. If you aren't sure how the law applies in your state, ask your attorney for an explanation.

While the laws differ from state to state, your liability release is more likely to be enforced if you follow some basic guidelines. A primary reason why liability releases are not enforced is poor wording. For a release to be valid, it must be drafted clearly, without ambiguity, and in compliance with state law. Generally, the location of the activity will determine which state's law applies. 

If you need a release form, ask your liability insurer if it has one it can share with you. You can also ask your insurance agent or broker to provide a form. Other possible sources are business associates, competitors, and trade or professional organizations.

Once you have obtained a release form from a reliable source, ask your attorney to review it. He or she can tell you whether the release is appropriate for your business. If it isn't, your attorney can draft one that's more suitable. Most attorneys charge a modest fee to draft such documents. Whatever the fee, it will be less than the cost of a lawsuit. Ask your attorney to review the form at least once a year. Laws change periodically, and the language in your form may need to be adjusted.

Avoid These Mistakes!

Many business owners make mistakes when using liability release forms. Here are some errors to avoid.

  1. Using forms you've downloaded from the Internet. Forms you find on the Internet may not be appropriate for your business and may not meet your state's legal requirements.
  2. Drafting your own release form. Unless you are an attorney, don't use forms you've written yourself. The cost of hiring an attorney to draft a properly-worded document is money well spent.
  3. Using confusing language, including legalese. To be enforceable, a liability waiver must be clear and understandable to the customer or patron.
  1. Burying the release in fine print. A release must be clearly visible to the patron. Don't try to hide it by using with tiny print or burying it in another document. Release language should appear in a separate document so it is easy to identify.
  2. Using forms that contain blank spaces. Don't hand a form to a patron that is missing information. Be sure all blank lines are filled in except those that are to be completed by the patron. The patron must be able to read and understood the agreement he or she is signing.
  1. Using forms your patrons can't understand. Some patrons may have language, eyesight, or other issues that might impair their ability to understand the release. These patrons may require releases in large print, braille, a foreign language, or some other format.

When written properly, releases of liability can serve as a powerful defense against bodily injury claims. Business owners can get an idea of the types of releases that are successful, and those that aren't, by reviewing court cases at the University of Vermont's website. The University sponsors an equestrian team, and it maintains a strong horse and stable owner program. It tracks court cases on equine law, including those related to liability waivers.

Good Business Practices

Your liability releases are more likely to be enforced if you follow good business practices. Your employees must understand how to use releases properly. They should insist that all patrons read the release so that they understand its terms. Patrons should not be rushed. If they have questions, your workers should provide answers. Your employees should also ensure that all blank lines are filled out. They should reject any release form that a patron has failed to complete, even if they risk losing a sale.