Product Update

Court Interpretation of Exculpatory Clauses Updated in Contractual Risk Transfer

Exculpatory clauses are common risk transfer devices that are found in a variety of contracts and agreements. These clauses attempt to extinguish tort liability through a contractual provision. However, exculpatory clauses are not always enforceable. To that end, courts consider several factors when determining whether an exculpatory clause is enforceable. These factors include whether the clause is clear and unambiguous, whether the intent of the parties is clearly and unequivocally expressed, whether the clause seeks to exculpate a party for gross negligence or willful or wanton conduct, whether the clause is prohibited by a state statute, and whether the clause is contrary to public policy.

If you are negotiating or reviewing a contract that contains an exculpatory clause, it is important to know the factors that courts in a particular jurisdiction use when interpreting such clauses. The Exculpatory Clauses: Court Interpretation section, updated in this release of Contractual Risk Transfer, contains updated summaries of case law from the District of Columbia and the 50 states that have addressed the enforceability of exculpatory clauses, including the factors that each court examines when interpreting these clauses.

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