Avoiding Express Assumption of the Risk: Common Contract Defenses and Alternate Theories of Liability in California

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            A skillfully drafted release and waiver of liability is the most effective defense to a claim of negligence in the sports and recreation context, but plaintiffs have options to defend against the enforcement of the contract that they signed.   These defenses to the contract are variations on legal presumptions, favoring persons who are in an inferior bargaining position, which are intended to prevent unfairness, oppression, surprise, or generally unreasonable results in enforcing the contract.   These defenses to the contract are discussed in Part I, below.   Plaintiffs may also “plead around” the complete defense of express assumption of the risk by alleging causes of action other than negligence.   These alternate causes of action are discussed in Part II.

            A plaintiff may oppose the enforcement of an express assumption of the risk by claiming it is “unconscionable,” “adhesive,” or against public policy.   These are common defenses in contract cases generally.   A clear and unambiguous release and waiver agreement is a significant factor in overcoming these various contract defenses.   If the release and waiver provision is clearly drafted it is difficult for the plaintiff who signed the agreement to retrospectively, in the context of the litigation, claim unfairness, oppression, surprise or unreasonable enforcement, or to identify a public interest in preventing enforcement.  

            One defense to a contract is to claim it is “unconscionable.”   This defense has been raised, so far unsuccessfully, in several California cases regarding sports and recreation liability waivers/releases. 1   This defense has had some success in other states.

            California Civil Code section 1670.5 addresses unconscionable contracts or clauses.  

Subsection (a) states that “If the court as a matter of law finds the contract or any clause of the contract to have been unconscionable at the time it was made the court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result.”

Subsection (b) states that “When it is claimed or appears to the court that the contract or any clause thereof may be unconscionable the parties shall be afforded a reasonable opportunity to present evidence as to its commercial setting, purpose, and effect to aid the court in making the determination.”

            An “unconscionable” contract or provision has a procedural element in that there is an absence of meaningful choice on the part of one of the parties, and a substantive element in that the terms unreasonably unfavorable to one of the parties. 2

            Procedural unconscionability requires “oppression” arising from unequal bargaining power and “surprise” arising from terms hidden in a “prolix printed form drafted by the party seeking to enforce the disputed term.” 3   Accordingly, the clarity of the terms of the release/waiver are a significant factor in the unconscionability analysis.   In Hulsey v. Elsinore Parachute Center the court found it unlikely that the plaintiff, “having initialed the [“Agreement and Release of Liability”] in three places and signed it in one could have harbored any reasonable expectations other than what was unambiguously recited in the title and text of the agreement.” 4   In Allan v. Snow Summit, Inc., the court noted that the release provided “clear, express notice of the risks.” 5

            Substantive unconscionability is the reallocation of the risks of the bargain in an objectively unreasonable or unexpected manner. 6   Although sports and recreation waivers/releases are one-sided, courts have determined that the reallocation of the risk to the user is not unconscionable. 7    In Kurashige, the court observed that “[t]here is no evidence plaintiff could not have ridden his motorcycle elsewhere without the constraints imposed upon him by defendants.” 8

B.	Contract of Adhesion: Standardized Form Contract

            A “contract of adhesion” is a common type of “unconscionable” contract.   An “adhesion contract” is “a standardized contract, which is imposed and drafted by the party of superior bargaining strength, and relegates to the subscribing party only the opportunity to adhere to the contract or reject it.” 9    Most waiver and release agreements are per force adhesion contracts as they are standardized forms, prepared by the party with superior bargaining power.

            A contract of adhesion is fully enforceable unless it (1) does not fall within the reasonable expectations of the weaker (“adhering”) party, and (2) is unduly oppressive or “unconscionable.” 10

            California case law has consistently held that ordinary liability releases are not adhesion contracts unless they implicate public policy. 11    In Allan v. Snow Summit, Inc., the court noted that the plaintiff could not show that the contract did not meet his reasonable expectations since he had adequate notice of the terms of the exculpatory contract and subjectively demonstrated that notice. 12   The court also noted that sports and recreational activities are not “essential” activities such as would implicate the public interest. 13   Again, a clearly drafted release/waiver agreement is a significant factor in avoiding a claim that the exculpatory provision is an unenforceable contract of adhesion. 14

C.	Public Policy: Protects Consumers of Essential Services

            Another defense to sports and recreation liability waivers and releases is to argue that the contract is contrary to public policy as placing a consumer of essential services in an onerous bargaining position.   There have been repeated attempts in California to void sports and recreation releases and waivers as contrary to public policy under California Civil Code section 1668.   To date, none of these efforts have been successful.

California Civil Code section 1668 states that “[a]ll contracts which have for their object, directly or indirectly, to exempt anyone from responsibility for his own fraud, or willful injury to the person or property of another, or violation of the law, whether willful or negligent, are against the policy of the law.

            The broad language of Civil Code section 1668 does not apply to every contract. 15    It only applies to contracts that involve the “public interest.” 16

            Tunkl v. Regents of the University of California, 17 outlines the characteristics of the type of “public interest” transaction in which a release/waiver agreement will be held invalid:

(1) It concerns a business of a type generally thought suitable for public regulation.  

(2) The party seeking exculpation is engaged in performing a service of great importance to the public, which is often a matter of practical necessity for some members of the public.  

(3) The party holds himself out as willing to perform this service for any member of the public who seeks it, or at least for any member coming within certain established standards.  

(4) As a result of the essential nature of the service, in the economic setting of the transaction, the party invoking exculpation possesses a decisive advantage of bargaining strength against any member of the public who seeks his services.  

(5) In exercising a superior bargaining power the party confronts the public with a standardized adhesion   contract of exculpation, and makes no provision whereby a purchaser may pay additional reasonable   fees and obtain protection against negligence.  

(6) Finally, as a result of the transaction, the person or property of the purchaser is placed under the control of the seller, subject to the risk of carelessness by the seller or his agents. 18

            To date there are no California cases that have voided a sports and recreation release or waiver on the ground that it is contrary to public policy. 19

            “There is no public policy which opposes private, voluntary transactions in which one party, for consideration, shoulders a risk which the law would otherwise have placed upon the other party.” 20 

D.	Execution of Contract Presumes that Contract Read and Understood

            “Ordinarily, one who accepts or signs an instrument, which on its face is a contract, is deemed to assent to all its terms, and cannot escape liability on the ground that he has not read it.   If he cannot read, he should have it read or explained to him.” 21 

E.   Unsigned Contract is Not Valid

            A release is not valid unless it is signed. 22   Similarly, an agreement that is signed on behalf of another person is generally ineffective. 23

F.   Minors May Disaffirm their Contracts

            California Family Code section 6710 states that a contract of a minor made while under the age of 18 may be disaffirmed by the minor himself either before his majority or within a reasonable time thereafter.   Disaffirmance may be made by any act or declaration and express notice to the other party is unnecessary.   The filing of an action is sufficient. 24    However, in some states a minor may also ratify the agreement after reaching the age of majority. 25 

II.	Alternative Causes of Action: Gross Negligence/Strict Liability/Fraud

            Express assumption of the risk is a complete defense to causes of action based on the theory of negligence.   However, a plaintiff may be able to “plead around” the application of the defense of express assumption of the risk, given the correct fact pattern, by alleging fraud or even strict products liability.

A.   Wrongful Death Actions/Gross Negligence

            An exculpatory agreement is an express assumption of the risk and is a complete defense in negligence and wrongful death actions. 26   Be sure to include a term in the release/waiver that operates to bind the heirs/survivors of the releasors. 27

            California does not recognize a cause of action for “gross negligence” independent of a statutory basis. 28

B.   Strict Liability

            Disclaimers of strict products liability and express assumptions of the risk of a product (as opposed to a service) by the consumer are void. 29   Including a provision disclaiming or assuming the risk of strict liability is an invitation to a court to find the release/waiver to be overreaching and thus unenforceable.  

            The policy supporting the law of strict products liability is to protect consumers from injuries caused by defective products. 30   In furtherance of this policy, strict products liability eliminates the requisites of negligence and contract law; the consumer need not prove negligence or contractual privity but only that the product is defective and caused his damages. 31   Given that the contractual relationship between product seller and consumer is irrelevant, strict products liability doctrine voids manufacturer/seller contractual liability disclaimers. 32

            However, express assumption of the risk is probably effective to bar a cause of action for strict liability for “ultrahazardous activities”.   A recreational activity is not “ultrahazardous” where it can be performed safely, is not uncommon, and where the plaintiff is a participant in the activity and therefore not within the class of persons which the strict liability doctrine for ultrahazardous activities was designed to protect. 33   The reasoning of the Hulsey court could easily be extended to any high risk recreational activity/extreme sport so long as it can be performed safely (allows participants some control over their own fate) and is not uncommon.   Participants in the “ultrahazardous” activity are not within the class of persons which this doctrine is intended to protect. 34

C.   Fraud and Misrepresentation

            Express assumption of the risk does not automatically bar a cause of action for fraud or misrepresentation in California. 35   The failure to disclose relevant facts affecting the essence of a release agreement or waiver may constitute “actual fraud” invalidating the contract. 36   Such statements may also constitute conflicting parol evidence that could void the language of the release.  

            Including a provision disclaiming or assuming the risk of fraud or misrepresentation is an invitation to a court to find the release/waiver to be overreaching and thus unenforceable.   Exculpatory clauses have been found to be void and against public policy insofar as they assert a bar to liability for willful or wanton misconduct. 37

            One court observed that a plaintiff should not be “relieved of the legal consequences of the things he signed because he did not realize what he was signing or that somehow he was distracted or misled from a fair realization of what was involved.” 38

            Also, in an unusual case, a plaintiff was found by the court to have expressly assumed the risk of the recreational activity despite the defendant’s conflicting representations regarding the terms of the release.   Defendant’s statement to plaintiff that the release was meaningless, simply an insurance prerequisite, was not held to be fraudulent given that plaintiff was an attorney who used releases in her legal practice, and that therefore her reliance on defendant’s statement was not justifiable. 39   Most plaintiffs are not attorneys, however, and verbal statements by employees that conflict with the terms of the release should be discouraged as they will create a question of fact for a jury to determine the existence of fraud, and vitiate the effect of the exculpatory agreement.

III.   Conclusion

            This is a general summary and overview of the current state of the law.   Changes occur from time to time in this specialized practice area.   Experienced counsel should be consulted with regard to the defense of a sports and recreation exculpatory agreement.  

            An appendix of release and waiver agreements published in California case law is attached hereto.   Some of these agreements were found to be enforceable under the specific factual circumstances presented in the case, and some were not.   PLEASE NOTE that different courts interpret contracts differently under different factual scenarios and that these agreements should serve as guideposts and references, and not as blueprints.

            The required elements for contract formation, and other useful contractual provisions to be included in an exculpatory agreement, are the topic of a separate article.   Drafting techniques to promote effective judicial interpretation of an exculpatory (waiver and release) agreement are covered in a separate article.

HOWIE & SMITH, L.L.P.
28 East Third Avenue, Suite 200
San Mateo, CA 94401
(650) 685-9300
(650) 685-3967

Footnotes:

1 Allan v. Snow Summit, Inc. (1996) 15 Cal.App.4th 1358; Kurashige v. Indian Dunes, Inc. (1988) 200 Cal.App.3d 606, 615; Hulsey v. Elsinore Parachute Center (1985) 168 Cal.App.3d 333.

2 A&M Produce v. FMC Corp. (1992) 135 Cal.App.3d 473, 486.

3 A&M Produce v. FMC Corp. (1992) 135 Cal.App.3d 473, 486.

4 Hulsey v. Elsinore Parachute Center (1985) 168 Cal.App.3d 333, 345

5 Allan v. Snow Summit, Inc. (1996) 15 Cal.App.4th 1358, 1377

6 A&M Produce v. FMC Corp. (1992) 135 Cal.App.3d 473, 487.

7 Allan v. Snow Summit, Inc. (1996) 15 Cal.App.4th 1358, 1377; Kurashige v. Indian Dunes, Inc. (1988) 200 Cal.App.3d 606.

8 Kurashige v. Indian Dunes, Inc. (1988) 200 Cal.App.3d 606, 614.   See also, Szczotgka v. Snowridge, Inc. (1994) 869 F.Supp. 247 (Vermont).   See also, Malecha v. St. Croix Valley Skydiving Club, Inc. (1986) 392 N.W.2d 727 (parachute jumping is not suitable for public regulation).   But c.f., Rosen v. LTV Recreational Development, Inc. (1978) 569 F.2d 1117 (Colorado) (court found that ski resort’s liability release was to be strictly construed due to public interest and was ineffective for failure to expressly exonerate ski resort for negligence).

9 Graham v. Scissor-Tail, Inc. (1981) 28 Cal.3d 807, 817.

10 Graham v. Scissor-Tail, Inc. (1981) 28 Cal.3d 807, 820.

11 Allabach v. Santa Clara County Fair Association, Inc. (1996) 46 Cal.App.4th 1007, 1016; Allan v. Snow Summit, Inc. (1996) 15 Cal.App.4th 1358, 1375-76; McAtee v. Newhall Land & Farming Co. (1985) 169 Cal.App.3d 1031, 1034.

12   Allan v. Snow Summit, Inc. (1996) 15 Cal.App.4th 1358

13 Allan v. Snow Summit, Inc. (1996) 15 Cal.App.4th 1358, 1375-76.

14 See also, Haines v. St. Charles Speedway, Inc. (1989) 874 F.2d 572 (Missouri); Wheellock v. Sport Kites (1993) 839 F.Supp. 730 (Hawaii) (enforceable adhesion contracts in non-California jurisdictions).

15 Vilner v. Crocker National Bank (1979) 89 Cal.App.3d 732, 735.

16 Cregg v. Ministor Ventures (1983) 148 Cal.App.3d 1107, 1111.

17 Tunkl v. Regents of the University of California (1963) 60 Cal.2d 92 (hospital-patient contract)

18   Tunkl v. Regents of the University of California (1963) 60 Cal.2d 92, 96, 98-101, fns. in Tunkl omitted   See also, Gardner v. Downtown Porsche Audi (1986) 180 Cal.App.3d 713 (auto garage disclaimer an invalid exculpatory provision).

19   Hulsey v. Elsinore Parachute Center (1985) 168 Cal.App.3d 333 (parachute jumping); McAtee v. Newhall Land & Farming Corp. (1985) 169 Cal.App.3d 1031 (motocross race); Okura v. United States Cycling Federation (1986) 186 Cal.App.3d 1462 (bike race); Coates v. Newhall Land & Farming Corp. (1987) 191 Cal.App.3d 1 (dirt bike park); Madison v. Superior Court (Sulejman Sulejmanagic) (1988) 203 Cal.App.3d 589, 598 (scuba diving);   Kurashige v. Indian Dunes, Inc. (1988) 200 Cal.App.3d 606; Saenz v. Whitewater Voyages, Inc. (1990) 226 Cal.App.3d 758, 764; Buchan v. United States Cycling Federation, Inc. (1991) 227 Cal.App.3d 134 (international bike racing competition ); Westlye v. Look Sports, Inc. (1993) 17 Cal.App.4th 1715 (skiing); YMCA of Metropolitan Los Angeles v. Superior Court (Mary Clark) (1997) 55 Cal.App.4th 22, 27.

20 Kurashige v. Indian Dunes, Inc. (1988) 200 Cal.App.3d 606.

21 Randas v. YMCA of Metropolitan Los Angeles (1992) 17 Cal.App.4th 158,163 (plaintiff did not speak English but gave no notice to defendant that could not read release); Hulsey v. Elsinore Parachute Center (1985) 168 Cal.App.3d 333, 339.

22 Wattenbarger v. Cincinnati Reds (1994) 28 Cal.App.4th 746.

23 See, e.g., Fedor v. Mauwehu Council, Boy Scouts of America (1958) 21 Conn. Supp. 38, 143 A.2d 466; Kotary v. Spencer Speedway, Inc. (1975) 47 App.Div.2d 127, 365 N.Y.S.2d 87; Cohen v. New York (1947) 190 Misc. 901, 75 N.Y.S.2d 846; Blanc v. Windham Mountain Club, Inc. (1982, Supp.) 115 Misc.2d 404, 54 N.Y.S.2d 447; Bernstein v. Seacliff Beach Club, Inc. (1962) 228 N.Y.S.2d 567; but cf., Guysinger v. K.C. Raceway (1990) 54 Ohio App.3d 17.

24 Family Code §6710; Celli v. Sports Car Club of America (1972) 29 Cal.App.3d 511, 517.

25 See, e.g., Jones v. Dressel (1978) 40 Colo.App. 459.

26 Knight v. Jewett (1992) 3 Cal.4th 296, 308 n. 4; Allen v. Snow Summit, Inc.   (1996) 15 Cal.App.4th 1358, 1372; Madison v. Superior Court (1988) 203 Cal.App.3d 589, 597-602 (wrongful death action); Coates v. Newhall Land & Farming, Inc. (1987) 191 Cal.App.3d 1, 9-10 (wrongful death action).

27 See, e.g., Hulsey v. Elsinore Parachute Center (1985) 168 Cal.App.3d 333, 348; Madison v. Superior Court (1988) 203 Cal.App.3d 589, 594, 603; Kurashige v. Indian Dunes, Inc. (1988) 200 Cal.App.3d 606, 616; International and National Brotherhood of Street Racers, Inc. v. Superior Court (1989) 215 Cal.App.3d 934, 940; Allabach v. Santa Clara County Fair Association, Inc. (1996) 46 Cal.App.4th 1007, 1014-15 .

28 Continental Ins. Co. v. American Protection Industries (1987) 197 Cal.App.3d 322, 328-30; Ordway v. Superior Court (1988) 198 Cal.App.3d 98, 108, n. 5.

29 Westlye v. Look Sports, Inc. (1993) 17 Cal.App.4th 1715, 1741-47 (plaintiff injured by defective ski boot binding rented from defendant ski shop).

30 Greenman v. Yuba Power Products, Inc. (1963) 59 Cal.2d 57.

31 Brown v. Superior Court (1988) 44 Cal.3d 1049, 1056; Greenman v. Yuba Power Products, Inc. (1963) 59 Cal.2d 57.

32 Greenman v. Yuba Power Products, Inc. (1963) 59 Cal.2d 57, 63.

33   Hulsey v. Elsinor Parachute Center (1985) 168 Cal.App.3d 333, 345-46 (parachute jumping not an “ultrahazardous” activity).

34 Luthringer v. Moore (1948) 31 Cal.2d 489, 498.

35 Palmquist v. Mercer (1954) 43 Cal.2d 92.

36 Palmquist v. Mercer (1954) 43 Cal.2d 92, 100 (plaintiff was an inexperienced horseback rider who requested a gentle horse and was not given one).

37 Falkner v. Hinckley Parachute Center, Inc. (1989) 178 Ill.App.3d 597.

38 Hulsey v.   Elsinor Parachute Center (1985) 168 Cal.App.3d 333, 339 (emphasis added).  

39 Guido v. Koopman (1991) 1 Cal.App.4th 837, 843-45.

Sample Sports and Recreation Waivers (Appendix)

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