MBE Rules · Contracts
Exculpatory Clauses
Exculpatory clauses
The rule
Clauses excusing negligence liability are enforced between sophisticated parties but void against public policy for intentional or reckless conduct, gross negligence, or essential public services with unequal bargaining power.
In plain English
Exculpatory clauses are provisions in contracts that relieve one party from liability for negligence. While these clauses can be enforced between sophisticated parties, they are generally not valid if they attempt to excuse intentional or reckless actions, gross negligence, or when they involve essential public services where there is a significant imbalance in bargaining power.
Worked example
A ski resort includes an exculpatory clause in its waiver, stating that it is not liable for injuries caused by its negligence. A seasoned skier signs the waiver but is injured due to the resort's gross negligence in maintaining the ski lifts. The court finds the clause unenforceable due to the nature of the negligence involved.
Memory hook
Exculpatory clauses: enforceable for the savvy, but not for the reckless or the public's safety.
The trap
Exams may present scenarios where students confuse the enforceability of exculpatory clauses with general liability waivers, leading to incorrect conclusions about the parties' sophistication or the nature of the negligence.
How examiners test it
Questions often involve fact patterns where a party tries to rely on an exculpatory clause after a significant injury, testing the student's understanding of the balance of power and the type of negligence involved.
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