Product Update

Exculpatory Clauses Discussion Updated and Expanded in Contractual Risk Transfer

Exculpatory clauses are common risk transfer devices that are found in a variety of contracts and agreements. However, confusion often exists over when to use exculpatory clauses as well as the differences between exculpatory clauses, limitation of liability provisions, and indemnity clauses. An exculpatory clause is also known as a "waiver of liability," "release of liability,” "waiver,” "liability waiver," or "release." No matter what name is used, exculpatory clauses typically extinguish or relieve a party from liability for a negligent or wrongful act. In other words, exculpatory clauses are contractual waivers of one party's right to sue before that party knows whether a loss will occur. This Contractual Risk Transfer release provides an updated and expanded discussion of exculpatory clauses, including the types of contracts and agreements in which such clauses are typically used, how such clauses differ from limitation of liability and indemnity provisions, as well as the various factors courts consider when interpreting exculpatory clauses.