When people enter contracts, they rarely think about such things as limitations on liability. I have heard more than one person claim that they are not effective. A recent Minnesota Court of Appeals decision reaffirms that limitation of liability provisions are important in certain circumstances. Carlson v. Barta, File No. 55-CV-12-412 (Minn. Ct. App. Unpublished, October 20, 2014) (“Carlson”).
In Carlson, the plaintiff was a professional logger who was injured when his vehicle went into a hidden frozen pond on the defendant's property. The parties had signed a standard form logging contract from the DNR that the plaintiff was familiar with. The contract included a clause wherein the logger would not hold the landowner liable for any claim arising from performance of the contract. Following trial, a jury found the landowner partially liable for the plaintiff's injuries. On appeal, the Minnesota Court of Appeals determined that the contract precluded such liability.
So such indemnity clauses are indeed enforceable in certain circumstances. In Carlson though, the court stated that such clauses are enforceable unless (1) it is ambiguous in scope, (2) it purports to release a party from “intentional, willful, or wanton conduct,” or (3) enforcement would contravene public policy. Citing earlier precedent, the court stated that: “People are free to contract away claims and remedies they would otherwise have.”
Public policy would typically come into play when there is a disparity of bargaining policy such as where it is “drafted unilaterally by a business enterprise and forced upon an unwilling and often unknowing public for services that cannot readily be obtained elsewhere.”
The bottom line is that in an ordinary arms length setting where the parties have equal bargaining power, the limitations of liability clause is important and should not be ignored.