Contract Release: Everything You Need to Know
A contract release is an agreement in which one party agrees it has no claims against the party that's named in the release.3 min read
A contract release is an agreement in which one party agrees it has no claims against the party that's named in the release. A release is commonly known as a release of liability or any of the following:
- Release agreement
- Release form
- Liability waiver
- Liability release
- Waiver of liability
What Is a Release?
When you sign a release, you're agreeing that you hold no claims of any kind against the named party.
It's common to find releases in connection with legal settlements. For instance, if you're involved in a car accident and the other driver's insurance company says it will fix your car, the company will likely demand that you sign a release. By signing this, you agree that in exchange for repairing your car, you won't sue the other driver.
Be cautious about signing a release.
Signing a general release means that you essentially give up the right to sue if you later discover any physical injuries you're currently unaware of. Plus, if you sign a release after an accident settlement, you won't be able to request that the insurance company pay for damages if a passenger who was in your car decides to sue you later for sustained injuries.
The other type of release — commonly referred to as a waiver of claims, a release of liability, or simply a waiver — provides that you release a party in advance from liability for claims that may arise later from some activity. For instance, you might sign a release so that your child can attend summer camp or participate in team sports. This release shifts the risk of injury from the other party onto you.
If the agreement is properly worded and you sign it, you may be prevented from suing the other party later, even if the party was grossly negligent.
Generally, it's advisable to seek legal counsel before you sign any kind of release. This is especially important when you're dealing with insurance companies, which often ask you to give up your right to file claims or sue in the future. If you get this type of request, don't sign without first seeking the advice of a lawyer.
About a Release of Liability
A release of liability is what happens when two parties agree to waive a legal claim. You agree not to pursue legal action in exchange for compensation. It's essentially a way to settle a dispute without going to court. For example, you might be asked to sign a waiver before being allowed to take part in a high-risk or physical activity.
The involved parties in a release of liability are the following:
- The releasee: This is the party that makes a payment, so it can be released from possible future claim for damages or injuries.
- The releasor: This is the party that's receiving money or other type of consideration in exchange for abandoning its claim.
Sometimes, both parties may say that the other party is at fault for damages or injuries. When this occurs, they may sign a mutual release agreement. In the event that one party is more at fault than the other, that party may offer additional compensation.
What do Parties Use a Release of Liability For?
Generally, a release of liability is useful in releasing a party from liability in case an accident or other incident leads to damage or injury.
To be more specific, you may use a release to do the following:
- Release a contractor from liability in case he damages your property while conducting landscaping or roofing services.
- Compensate the party that's not at fault in order to release yourself from liability when you're the at-fault driver in a car accident.
- Release both the other party and you from liability when a disagreement occurs over who's to blame for damages or injuries (mutual release).
- Settle a debt when there's a dispute over how much is owed or another part of the loan contract.
- Waive future claims against a company if participants are injured during a sporting event or other potentially hazardous activity.
Because contract legalese can be confusing at times, it's best to consult with a contract law expert before signing any agreement, particularly one that releases the other party from all liability.
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