learn more about waivers and releases

Looking for Answers?

What is a waiver and how is it used? Does a waiver always work? Why does a waiver fail?  How do I write an effective waiver?  What if the client is a minor?  See Liability Waivers 101. . .

N.C. Law Regarding Enforcement of Waivers of Liability

 By Doyice Cotten

12620693_7c8acc40d5_mThis case (McMurray v. United States of America, 2012 U. S. Dist.  LEXIS 176608) involved a government vehicle accident in which a passenger was injured when the U.S. Marine driver ran a red light. While this is not specifically sport-related, it is pertinent to the enforcement of waivers in North Carolina.

Debra McMurray was returning from a Marine Corps seminar when she was injured. The issue was the enforceability of a waiver that McMurray signed before the accident; in the waiver, McMurray waived any right to sue the United States arising from the United States’s negligence, including during transportation. McMurray believed that the seminar would provide her insight while advising students interested in military service. To attend the conference, she was required to ride with a Marine recruiter.

In Federal Tort Claims Act actions, the substantive law of the state in which the act or omission occurred is the governing law. Since the North Carolina Supreme Court had not spoken on the subject, it was the duty of this court to predict how the Supreme Court would rule.

The court noted that North Carolina enforces exculpatory waivers under the principle of freedom of contract.  Thus, with few exceptions, one may agree to liability limitations for ordinary negligence; however, such contracts are disfavored and are strictly construed against the party asserting the waiver. North Carolina courts have determined that waivers will not be enforced when they (1) violate a North Carolina statute, (2) are gained through an inequality of bargaining power, or (3) contradict a substantial public interest.

The plaintiff argued that there was a genuine issue of material fact as to whether the Release falls within the three exceptions to the general rule of enforcing such releases.

Prohibited by Statute?

Plaintiff argued that enforcement would violate North Carolina General Statute § 20-158(b)(2), which prohibits a driver from running a red light.

However, the court stated that this statute merely deals with operating a motor vehicle. It cited case law which provided that, for the statutory exception to apply, the statute must mandate a specific standard of care. The court pointed out the substantial difference between this statute and one in Strawbridge v. Sugar Mountain (2004) where the court disallowed a waiver that conflicted with a statute imposing a specific duty of care on ski operators. Subsequently, this court ruled that the waiver was not in violation of a statute.

Unequal Bargaining Power?

McMurray then argued that the waiver was based upon unequal bargaining power – a citizen versus the United States of America. That certainly sounds unequal on the surface. The court defined unequal bargaining power:

… unequal bargaining power exists when a party must ‘accept what is offered or forego the advantages of the contractual relation in a situation where it is necessary for him to enter into the contract to obtain something of importance . . . which for all practical purposes is not obtainable elsewhere.

McMurray contended that the seminar was an important and unique professional opportunity and that she had no power over the terms of her participation.

The court stated that the non-negotiable terms of the contract did not necessarily mean the Release involved an inequality of bargaining power; she still had the option of declining to attend the seminar. The court questioned the power disparity, pointing out that there was no evidence she could not obtain the information provided in the seminar elsewhere. Unequal bargaining power voids a contract only when the object to be obtained is not available elsewhere. Accordingly, the court ruled that the United States did not obtain the Release through unequal bargaining power.

Contradicts a Substantial Public Interest?

McMurray next argued that the waiver conflicted with a substantial public interest noting that North Carolina law provides that a waiver does not protect one from liability for negligence in the performance of a public duty.

The court discussed the fact that the substantial public interest exception is “narrowly tailored” and only “applies to entities or industries that are heavily regulated.” It listed waivers between doctors and patients, rider’s participation in motorcycle safety training program, cosmetology services, and use of hazardous chemicals as examples of situation in which the public interst exception had applied. Situations in which the exception did not apply and the waiver was enforced were then noted: parental waiver for 15-year-old for Navy Junior ROTC, for amateur go-kart racing, and a waiver in rental contract for installation of gas tank and pumping equipment. Consequently, the court ruled that the waiver did not violate the public interest.

Summary

In summary, the U.S. District Court concluded that North Carolina’s adherence to freedom of contract provided the governing rule in this case. The waiver met the criteria for an enforceable waiver and the waiver was enforced in favor of the defendant.

 

Photo Credit: Thanks to David and Flickr.