Exculpatory Clauses: Can They Protect You?
Much like waivers and releases, Indiana courts have long recognized the validity of exculpatory contracts in which parties agree in advance that one is under no obligation of care for the benefit of the other and shall not be liable for the consequences of conduct which would otherwise be negligent. Shumate v. Lycan, 675 N.E.2d 749, 752 (Ind. Ct. App. 1997) (citing LaFrenz v. Lake City Fair Bd., 360 N.E.2d 604, 607 (Ind. Ct. App. 1977)). It is well-settled in Indiana that exculpatory contracts are not against public policy. United State Auto Club (USAC) v. Smith, 717 N.E.2d 919 (Ind. Ct. App. 1999). Generally, parties are permitted to agree that a party owes no obligation of care for the benefit of another, and thus, shall not be liable for consequences that would otherwise be considered negligent. Wabash County YMCA v. Thompson, 975 N.E.2d 362 (Ind. Ct. App. 2012) (citing Marsh v. Dixon, 707 N.E.2d 998, 1000 (Ind. Ct. App. 1999)).
However, Indiana courts have held that an exculpatory clause, a clause within a contract, will not act to absolve a party from liability unless it “specifically and explicitly refer[s] to the negligence of the party seeking release from liability.” Marsh, 707 N.E.2d at 1000 (quoting Powell v. Am. Health Fitness Ctr. of Fort Wayne, Inc., 694 N.E.2d 757, 761 (Ind. Ct. App. 1998)).
An exculpatory clause may be found sufficiently specific and explicit on the issue of negligence even in the absence of the word itself. Anderson v. Four Seasons Equestrian Ctr., Inc., 852 N.E.2d 576, 581 (Ind. Ct. App. 2006); c q, 975 N.E.2d 362 (Ind. Ct. App. 2021). Furthermore, an exculpatory clause not referring to the negligence of the release may act to bar liability for those damages incurred which are inherent in the nature of the activity. Anderson, 852 N.E.2d at 581. The requirement of specificity is necessary only when the risk of harm is the defendant’s own negligence. Anderson, 852 N.E.2d at 581-582.
It is important to understand if an exculpatory contract, exculpatory clause, or an indemnity agreement will provide the necessary protection. Contact a member of Barrett McNagny’s Litigation team with questions.
About the author:
Lauren Minke is a member of Barrett McNagny's litigation team with an emphasis in insurance defense and medical malpractice defense. She has first chair bench trial and second-chair jury trial experience and has been selected for inclusion in the 2020 & 2021 Indiana Super Lawyers publications as a 'Rising Star'. She can be reached at (260) 423-8858 or at email@example.com.