Are Waiver/Releases Worth the Paper they are Written On?

2012-03-31T16:02:37+00:00 March 31st, 2012|CS, Sports Management|

by John Sadler

This article is brought to you with permission from Sadler & Company.

As a sports insurance specialist and risk manager, I often wondered the answer to this question myself because of all the contradictory information on this topic.  To satisfy my curiosity, I interviewed the real authorities — the claims managers of the two leading sports insurance companies in the US. After all, they actually settle and litigate hundreds of these cases every year.

A waiver or release is a written agreement where the player and parent sign promising not to sue the league and it’s directors, officers, or volunteers should the player be injured.

In the context of a minor (under age 18), the usefulness of a waiver/release agreement is dependent on your particular state’s law.  Depending on the state, there are three different outcomes that are most likely.

In the minor context (under age 18), only a few states will uphold a waiver/release for the purposes of immediately dismissing a lawsuit on Summary Judgment.  This outcome is extremely rare.  An Ohio court recently upheld such a waiver and said that under some circumstances a parent’s signature could bind a minor to such an agreement.  We will have to keep our eye on this case to see if it sets legal precedent in other states. 

Please note that even if you do win on Summary Judgment, your legal defense costs can still be in the $10,000 to $20,000 range.

Other states will immediately throw out such a waiver/release agreement because a minor under the age of 18 is not legally competent to enter into a binding contract.  These states reject the notion that a parent can enter into such a contract on behalf of their minor child. 

The majority of states will give some weight to a waiver/release (in the minor context) only if the following three conditions are met:

  1. The intent is crystal clear and written in language that is easily understood.
  2. The injury is more accidental in nature and not the result obvious negligence.
  3. The waiver/release is “well drafted” and avoids common pitfalls.

If the above 3 conditions are met, most courts still will not immediately throw out a lawsuit on Summary Judgment.  Instead, the legal system will give weight later on in the process as the injured party’s attorney must overcome the defense’s presentation of the waiver/release. 

Because the benefit occurs later in the legal process, legal defense costs can still be extremely high.  This is why a waiver/release absolutely should not be used in lieu of purchasing liability insurance.  Nevertheless, the benefit is still very important because it will ultimately limit the amount of damages that are payable.  This is why most insurance companies strongly recommend or mandate the use of waiver/releases.  Remember, lower claims may mean lower renewal pricing on your insurance. 

By the way, waiver/releases are very effective in the adult context in terms of immediately having the lawsuit dismissed on a Summary Judgment.  The majority of states uphold this view as long as the waiver is well drafted and the injury is not characterized  by gross negligence.  But once again, even if you win on Summary Judgment your legal defense costs may range from $10,000 to $20,000.

There is one other important reason to use a waiver/release. 

Did you know that you don’t have to be proved negligent to lose a lawsuit when a sports participant is injured?  That’s right, in many states the injured party must only prove that he was not aware of the risks involved in participation and did not give his informed consent to be subjected to such risks.  This is why a “well drafted” waiver/release should contain a risk warning and informed consent provision.

The bottom line is that a well drafted waiver/release is worth the paper it’s written on.  The claims managers from the two leading sports insurance carriers guaranteed me of this fact and cited countless examples of how it gave them a negotiating edge.

You might be asking yourself what constitutes a “well drafted” waiver/release.  Quite simply, it means that virtually every phrase in every sentence was specifically written to counter a court case that found a pitfall that resulted in the waiver/release being thrown out.  There are at least fifteen common pitfalls that must be avoided.

If you’re interested in receiving a sample waiver/release that was written to avoid these pitfalls, call Sadler & Company at 1- 800-622-7370 or visit our website at http://www.sadlersports.com and print from our Free Reports section.