By Doyice Cotten
In contract law, it is generally considered manifestly unfair if a stronger party has an advantage in bargaining power over a weaker party. Thus, a court may intervene by setting aside or modifying the contract to restore equity.
What effect does this have on liability waivers where one party (the provider) requires that the patron sign a waiver releasing the provider from liability in the event of an injury caused by the negligence of the provider? The patron must sign the waiver in order to participate in the activity – the terms of the waiver are dictated by the provider and the patron must accept those terms in order to participate in the activity or use the facility – in other words, “take it, or leave it.”
This is an adhesion contract. An adhesion contract is a “standardized contract which is imposed and drafted by the party with superior bargaining power and which relegates the subscribing party only the option of signing the contract or rejecting it” (i.e., allowing no opportunity to bargain) (Westlye v. Look Sports, Inc., 1993). Adhesionary contracts generally violate public policy and will generally not be enforced if one of the parties has a clearly dominant bargaining position over the other.
The Exception to the Rule
But why do fitness and recreation providers such as health clubs, whitewater rafting companies, trampoline parks, recreational sports leagues, karate studios, and indoor climbing facilities generally require waivers? If such waivers are adhesion contracts and are unenforceable, why do businesses use them? They use them because they are enforceable in most states.
Courts in most states have ruled that adhesion contracts pertaining to participation in sport, recreation, and fitness activities are enforceable. There are two reasons for this: first, courts do not consider the provision of sport, recreation, and fitness activities to be an essential service. Public transportation, hotels, water service, electrical service, medical treatment, emergency service, and police protection are examples of services that are commonly considered essential services. One can easily see the distinction between the necessity of these services and the non-essential nature of sport, recreation, and fitness services. Second, the courts recognize that persons seeking sport, recreation, and fitness activities have the option to refuse to sign the waiver. They can then either go to a different provider for opportunities or select different types of sport, recreation, or fitness activities.
For example, it is not a necessity that the patron go whitewater rafting; he or she can go hiking instead. One does not have to join a health club to improve one’s fitness; one can run in the park and purchase fitness equipment for home use. One does not have to patronize a water park requiring a waiver; one can go to the beach, a stream, or a swimming pool. These services may be fun and desirable; however, they are not essential and the patron is free to choose not to sign the waiver. In contrast, there is usually no option when public transportation, medical service, or water supply are the services; they are of interest to the public as a whole and waivers for access would violate public policy. It is generally considered that sport, recreation, and fitness activity providers and their clients have equal bargaining power because the client has other options.
That all adhesion contracts, even those for sport, recreation, and fitness activities, are unenforceable is a common misconception. The fact is, however, in most states waivers involving sport, recreation, and fitness activities are not ruled contrary to public policy since clients are under no compulsion to sign and may seek such services elsewhere. Additionally, these adhesion contracts, if well-written, are usually fully enforceable absent the presence of two judicially imposed limitations. The first is that the contract must fall within the reasonable expectations of the weaker or adhering party and the second is that the contract must not be unduly oppressive or unconscionable under the applicable principles of equity.