How to Draft Exculpatory Clauses That Limit or Extinguish Liability

E xculpatory clauses extinguish or limit liability of a potentially culpable party through the use of disclaimer, assumption of risk and indemnification clauses as well as releases of liability. For decades, Florida courts have wrestled with issues relating to the enforcement of exculpatory clauses where liability arises from personal injury, real estate, construction, and commercial disputes. These provisions gain significance as parties seek to shift the monetary risk of business transactions to others. Frequently these clauses are showcased in contractual agreements involving common carriers, promoters of sporting events, providers of design/construction services, and among participants to e-commerce transactions. As lawyers, we constantly draft and interpret exculpatory clauses hoping that the product of our efforts will withstand judicial scrutiny. Recognizing that the economic stakes often are high, counsel must be aware of the pitfalls associated with the drafting and interpretation of such clauses. These issues should be of enormous interest to lawyers because when the deal goes sour, disgruntled clients may seek to recoup their losses by challenging the lawyer’s advice through claims for legal malpractice. This article examines how Florida courts interpret exculpatory language as utilized in releases, waivers of liability, assumption of risk and indemnification agreements as well as other types of contracts. As similar legal principles apply to drafting these various types of clauses, they will collectively be discussed and referred to throughout this article as “exculpatory clauses.” In addition, this article will offer practical suggestions to assist counsel in drafting enforceable exculpatory clauses.