Taxation & Estate Planning

LIMITS ON CONTRACTUAL RELEASES [FLORIDA]

By Charles Rubin

Contracts often contain release or exculpatory language that seek to protect a party from liability for future activities. Such clauses are disfavored in the law because they relieve one party of the obligation to use due care and shift the risk of injury to the party who is probably least equipped to take the necessary precautions to avoid injury and bear the risk of loss. Nevertheless, because of the countervailing policy that favors the enforcement of contracts as a general proposition, unambiguous exculpatory provisions are enforceable.

While  such clauses will be enforceable, there are limits. A recent Florida case points out two of those limitations. In the case, a builder of a residence included a very broad clause that released the builder from any liability for faulty construction whether based on negligence, gross negligence, strict liability or intentional conduct. The 5th District Court of Appeals noted at least two problems with the release language.

First, it noted that the release clause is unenforceable to the extent it seeks to release the builder for an intentional tort. Second, it noted that a party may not contract away its responsibility to comply with a building code when the person with whom the contract is made is one of those whom the code is designed to protect. Consequently, to the extent that the builder's release language sought to protect it against liability from such sources, it was unenforceable.

SUE A. LOEWE AND WARREN LOEWE, Appellant, v. SEAGATE HOMES, INC., Appellee. 5th District. Case No. 5D07-1683. Opinion filed July 11, 2008.

Full post as published by Rubin on Tax on July 12, 2008 (boomark / email).