What is a liability waiver?

Author: Ian Aldridge, Progressive Legal

In today’s litigious society, businesses use liability waivers to protect themselves from potential legal action. A liability waiver limits liability for injuries or damages caused by their products or services. This article explores the benefits and potential drawbacks of liability waivers and offers tips for creating an effective waiver for your business.

What is a liability waiver?

A liability waiver is a document that releases a party from any legal claims or liabilities against it. 

Liability waivers inform the other party you’re engaging with (participant) about inherent risks and clarify the rules to partake in the activities of your business.  

A liability waiver is often seen alongside contracts when one party wishes to release themselves from any possible damages or problems that may arise during the lifetime of an agreement. It’s a no-brainer for businesses running high-risk services, to release themselves from responsibility for an injury or accident. Examples of businesses that run high-risk services are: 

• Gyms;  
• Bungee-jumping/sky-diving companies; 
• Rock climbing gyms; 
• Event venues; 
• Chiropractors/osteopaths;  
• Speakers and conference organisers. 

Why should you have a liability waiver for your business?

A benefit of a liability waiver is that it helps to limit potential risks of a product or service and of liabilities a business can face. For participants, it provides an opportunity to learn about the risks involved in or associated with a product or service and make an informed decision about whether to participate. When used correctly, liability waivers can be an important tool for managing risk and protecting a business and its participants. 

It’s also important to note that liability waivers should be used in conjunction with clear and concise terms and conditions to ensure that all parties understand their rights and responsibilities. This can help to prevent misunderstandings or disputes that may arise from the use of a liability waiver.

Key Terms to include in a Liability Waiver

One of the most important rules of liability waivers is to use clear and concise language. Other important parts of a liability waiver are the following 6 clauses: 

1. Inherent Risks Clause 

Liability waivers typically have an inherent risks clause which outlines the specific risks associated with the product or service a business provides and states that the participant understands and accepts these risks.  

This clause is important because it helps establish that the participant was aware of the risks involved in the product or service a business provides and that a participant agreed to the risks.  

Without this clause, a business can be held liable for injuries sustained even if it took reasonable precautions to prevent the injuries. As a result, an inherent risks clause is an essential part of any liability waiver.  

2. Assumption of Risk Clause 

This clause serves to shift the burden of liability from a business to a participant in the event that an accident should occur. This clause states that the participant agrees to take on all risks associated with the product or service and waives their right to sue a business for damages.  

While this may seem like a risky proposition, it’s actually quite common for businesses to require participants to sign liability waivers. In many cases, it is the only way that businesses can continue to offer certain activities.  

If the participant is aware of the risks involved, signing a liability waiver can be a perfectly reasonable decision. Without this clause, the liability waiver would be invalid, and a business can still be held liable. For this reason, it is essential that a liability waiver includes a clear and concise assumption of risks clause.  

3. Release Clause

In order to protect a business from being held liable in the event that someone is injured while using or participating in a product or service on their property, many liability waivers have a release clause.  

This clause releases a business from any burden or responsibility in the event that the participant is harmed in any way. In many cases, by signing the waiver, the participant acknowledges that they are aware of these risks and accepts them. The inclusion of this clause relieves a business of any harmful or risky consequences that may result.  

However, a release clause will not protect a business against all types of injuries or damages. In particular, it will not cover injuries or damages that are caused by intentional misconduct or negligence by a business. Additionally, these clauses typically will not cover injuries or damages that are considered to be inherent risks of the product or service itself.  

4. Indemnification 

This clause protects a business from any legal action by a third party as a result of injuries caused to the participant during the business activities. The clause states that the participant agrees to hold the business harmless from any and all claims, damages, or liability arising from their participation.  

This includes any claims that may be made by the customer’s family or estate. Also, the participant agrees to reimburse the business. This clause can protect a business from any legal action that may be taken as a result of the participant’s engagement. 

5. Insurance 

An insurance clause limits or excludes insurance coverage for liability arising from the wilful or intentional acts of a business. This clause is also known as an exclusionary clause or an intentional acts exclusion.  

Its purpose is to protect the insurance company from being held liable for damages that are the result of intentional or wilful conduct of a business. This type of conduct is typically not covered by insurance policies, and as such, the inclusion of an insurance clause helps to clarify that coverage is not provided in these instances. 

6. Jurisdiction

This clause typically specifies that the law of the state in which a business is located will govern the interpretation of the liability waiver. However, it can also specify the jurisdiction in which any legal disputes must be filed.  

For example, if a liability waiver contains a choice of law clause specifying that all disputes must be filed in Sydney, then the courts in Sydney will have jurisdiction over any legal disputes that may arise from the contract. The benefit of this clause is that a business can avoid lengthy and expensive litigation.  

This clause may also specify the specific court that will have jurisdiction over the dispute. For example, all disputes must be filed in the NSW Courts. This clause can help businesses avoid the expense and delay of litigating in multiple or unfamiliar jurisdictions. 

Exceptions to liability waivers

In many cases, liability waivers can be a helpful way to reduce the risk of legal action. However, there are a few exceptions to this rule. 

First, if the waiver was signed as a result of fraud or duress, it may not be legally binding. If the negligence of the business providing the product or service led to death or injury, the waiver is also likely to be invalid.  

Key takeaways

Liability waivers are legal documents that can help protect businesses, organizations, or individuals from being held responsible for injuries or damages that may occur during a particular activity or event.  

However, liability waivers may not always be enforceable, and their effectiveness can vary depending on factors such as the language used in the waiver, the specific laws and regulations governing the activity or event, and the circumstances surrounding any incidents that may occur. 

It is important to carefully review any liability waiver before signing it, and to understand the specific risks and potential consequences associated with the activity or event in question. 

If you need a liability waiver, please contact our team of experienced commercial lawyers by filling out the form on this page or call 1800 820 083.