The ins and outs of hold harmless agreements and liability waivers

Many business owners are concerned about being sued by customers or clients for injuries that happen on their premises or while engaged in the activities or events their business runs. The best way to protect yourself from such lawsuits is to create a hold harmless agreement (HHA), also called a liability waiver or release.

How a liability waiver works

A liability waiver is a document your clients sign to indicate they understand all the possible risks involved in entering your premises or using your services. If your business offers kayak tours, for example, risks might include drowning, injury, hypothermia, sunburn, exposure, getting lost, and so on.

The waiver provides complete notice of all the possible scenarios of what could go wrong so that clients can provide knowledgeable consent to participate. By signing the waiver, the customer acknowledges they received notice, they know what could happen, and they won't hold you responsible should something go wrong.

Liability waiver validity

Hold harmless agreements are not always valid, so it is important to work with an attorney or liability waiver template when creating yours. Situations where such documents may not be valid include:

• If your state prohibits them, whether completely or in some situations
• If the agreement is against public interest, such as a liability waiver from an airline, where it is not in the public interest to protect an airline from liability that could result from a crash or accident

Negligence and waivers

Even if you have your customers sign a liability waiver, it won't protect you if your business is grossly negligent, although it may protect you in most circumstances against ordinary negligence.

Negligence means a failure by your business to take the reasonable care a reasonable person in a similar situation would take. Ordinary negligence is often unintentional and caused by oversight. For example, if your staff is unaware of spilled water on the floor of your gym and a member slips and falls, a waiver would most likely protect you.

Gross negligence is an extreme indifference or disregard for the safety of others, such as not providing a lifeguard at your gym's pool and someone drowns. In this instance, a waiver would not protect you.

How to create a liability waiver

You can create a separate liability waiver or insert a liability waiver clause into a contract. Both options are valid.

The waiver should:

• List the names and addresses of the parties.
• Give the date of the agreement and how long it is in effect for.
• List the location of the event or activity.
• Describe the activity or event the customer is going to participate in.
• List the possible risks and injuries. It should use the words "death and dismemberment" for complete coverage and should also include all risks "known and unknown."
• Be large enough print for someone to actually read.
• Use clear and unambiguous language.
• Be presented individually to each person, not as a group document everyone signs.
• Include consideration, which makes it a legally binding contract. To do this, start the agreement with the words, "In consideration for being allowed to participate."
• Release you from negligence to the full extent permitted by law and not attempt to protect you from gross negligence.
• Include a signature from the client.

Although there are ready-made HHAs available online, they may not work in all jurisdictions or situations. To ensure your document provides you the best protection possible, be sure to consult with an attorney.