Release Clause Requirements
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What are Release Clauses?
Release clauses, or “releases”, are agreements between two parties wherein one party surrenders their rights to file a lawsuit. A release clause is essentially a contract where the surrendering party agrees not to initiate a legal claim in the event of a loss or injury. Oftentimes the release clause will prescribe an alternative method for resolving disputes, such as mediation or alternative dispute resolution (ADR).
The use of a release clause is fairly standard practice in many situations, such as in a contract for a construction project or high risk activities such as skydiving. Since they are contracts, release clauses must conform to all the requirements of a valid contract.
What are the Requirements for a Release Clause to be Valid?
A release clause may either be agreed to orally or signed as a written document. There is no particular form that a release clause must take; however, the agreement must be clear and unambiguous, so it is better if the agreement is finalized in writing.
In general, the requirements for a valid release clause are similar to those of any contract:
- Both parties are capable of forming a contract (i.e., of sufficient mental capacity and of legal age)
- The parties have consented to the release clause
- The agreement is not illegal
- The agreement was reached through a valid offer and acceptance
- The release clause was supported by sufficient consideration (the parties must exchange something of value)
It is especially important that a party understand that they are signing a release clause. Release clauses are sometimes created as a separate agreement, but oftentimes they are embedded within the main contract. Thus, it sometimes happens that a person signs a contract not knowing that it included a release clause. For this reason, the parties should fully understand the entire contract before signing.
When is a Release Clause considered to be Void?
Release clauses are governed by contract law. Under contract law, there are certain factors that may render a release clause void. These factors usually involve the issue of consent, and may include:
- Duress: Consent to a release clause must be made voluntarily and knowingly. A release clause is voidable if it was signed under conditions of duress, such as when the plaintiff is forced to agree through a threat of violence
- Mistake: A mistake as to the nature of the agreement may also render a release clause voidable. For example, if the person thought that they were signing delivery document, but it was actually a release, the court would have to verify whether consent was actually given
- Fraud: Conditions of fraud or fraudulent misrepresentation may negate a release. In order to recover damages, the person signing the release must have relied on the fraudulent statement, and the fraud must be the cause of the person’s injury.
- Ambiguous language: If the release clause is unclear, a court will usually attempt to determine the basic intent of the parties. Intent may be determined through many factors including the past history of dealings between the parties or the standards of practice for the particular field of business
In addition, a release clause may be deemed unenforceable if it is contrary to public policy. A release violates public policy if:
- The release relates in any way to criminal prosecution (releases are generally only valid for civil lawsuits)
- Federal or state statutes prohibit the parties from surrendering their right to sue, or
- The release is rendered in advance of any liabilities
Thus, it is often recommended that release clauses be drafted and reviewed by an attorney before they are offered or accepted. Release clauses must conform to the requirements of law in order to have legal effect.
Do I Need a Lawyer for disputes over a Release Clause?
It is highly advisable to consult with a lawyer if you will be dealing in any way with a release clause. An experienced contracts attorney can help you draft a release clause if you need one, and they can be available to review the clause if you will be signing one. Although release clauses can sometimes prevent a lawsuit from being filed, the parties can still seek recourse in court if there is a dispute over the release itself.
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Last Modified: 02-23-2011 02:55 PM PST
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