International Society of Primerus Law Firms

The Ghost in the Closet: The Poorly Worded Release (The Threat To Limited Corporate and Officer Liability)

By: Alexander Sandie Pendleton

Kohner, Mann & Kailas, S.C.

Milwaukee, WI

It is not uncommon these days for companies to engage in or sponsor activities that can indirectly expose others to harm. When harm happens, officers, directors and other employees, as well as the business entity, can be exposed to a risk of significant legal liability. Because of this great peril, a business must seek to remove or minimize such risk through adoption of well considered and well drafted contractual arrangements (releases), which absolve the business of liability for its own negligence, or that of a party with which it has contracted. Unless properly drafted, such releases can end up worthless and exceedingly costly by way of subsequent monetary damages.

Such release agreements are viewed with disfavor by courts and are often read in a light that is least favorable to the business that wishes to avoid liability by the use of such agreements. Effective reduction of liability is rarely achieved through utilizing stock clauses copied with little thought from one document to another. Many companies are using forms that are unenforceable due to recent developments in this area of the law. Many others are using releases that may protect the business entity, but leave officers, directors and other employees fully exposed to personal liability. The language of the release itself is critical, but also in many situations careful consideration must be given to how that language is incorporated into a business registration and other forms; so too, the process by which the release agreement is signed can also (if not correctly designed) jeopardize the enforceability of the release. Vast experience in drafting and enforcing releases before judicial bodies by the drafter of any release is the greatest protection available to those seeking to avoid liability.

Companies must engage lawyers that have the required drafting and litigation experience to help guide the company through the dangers that exist with poorly-drafted releases. Such lawyers will have prepared release agreements and forms for large scale and multi-sport events (triathlons, marathons, etc.), for professional-sport and Olympic-training facilities, for high-risk recreational activities (skydiving schools and paintball combat facilities), and for manufacturers of high-risk recreational vehicles (motorcycles and snowmobiles). Such lawyers will include the authors of leading articles on the subject, and those who are a frequent speaker on the issue to both business and legal audiences. They will have successfully enforced release agreements in court, and have successfully defended clients in high-stakes wrongful death recreational activity cases.

Well-drafted agreement forms are not expensive and are cost effective when compared to the potential damages associated with one successful injury or wrongful death claim, and the resulting increase in business liability insurance that may follow.

To learn more about releases, and to find out whether the release language your business has used or is using is up to date, and drafted and deployed so as to best ensure you and your company are protected against costly potential claims, we invite you to visit the Kohner, Mann & Kailas, S.C. website devoted to this issue, www.releaselaw.com, or contact attorney Alexander Sandie Pendleton directly at 414-962-5110 or apendleton@kmksc.com.

For more information on Kohner, Mann & Kailas, S.C. or Alexander Sandie Pendleton, visit the International Society of Primerus Law Firms, or www.kmksc.com.

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