Updated October 30, 2020:

The general release definition is a legal document releasing one party from the right to bring a claim against another party.

What Is a General Release?

In small businesses, general releases are used in many different circumstances. A general release has a legal impact, as long as all requirements outlined in the agreement have been met. Since a general release is a contractual agreement, it must follow the principles of contract law. When one party surrenders its right to bring claims against or sue another party, this is a general release. The party that agrees to release the other from any future claims or legal action is called the releasor, while the party being released from the potential legal action is called the releasee.

Some of the examples of usage of a general release include settling claims for:

  • Damage caused by a child
  • Minor damage to a vehicle
  • Damage caused by a pet
  • Minor damage to property

A party that has been injured or the party that has potentially caused an injury might choose to seek a general release. The release must include consideration, or it will not be valid. Consideration means that the releasor receives something that is valuable when they sign the release. The releasor is choosing to release the other party from any and all claims when signing a general release form, not releasing the rights to one specific type of claim.

Before signing this type of a document, the releasor should review all terms and use caution. If the releasor is willing to release the other party of all potential claims, they can sign it. If not, they should not sign the form. Before signing, a releasor must consider if there are any possible claims against the other party. If there are potential claims, consulting a lawyer can be helpful to figure out next steps.

General release forms can also relate to current disputes, but the releasor is agreeing to relinquish the right to assert any future claims that come out of that existing dispute. This release will take away all potential claims, not just a single claim. A releasor, such as a business owner or employee, should consult with a lawyer before signing to make sure all terms of the release are reasonable and fair. Other phrases for general releases include:

  • Legal releases
  • Liability releases

General Release from Contract Liability

If a release relates to a dispute over a contract, the releasor, or injured party, will agree to take something of value and exchange that consideration for the release from any future liability.

For small businesses, suppliers or vendors might choose to release the owner of the business in exchange for payment. This release would relate to the contract for the goods or sales and would release the business owner from any future liability relating to the terms of the contract. If the owner of a business signed the contract on a long-term basis for the vendor to provide regular shipments of products or goods, the release might be beneficial if the business had a drop in the sales and was no longer able to meet the terms.

General Release from Tort Claims

Small business owners might also seek general releases for quite a few reasons. For example, if an employee is considering taking legal action against a business for wrongful termination or harassment, the company might agree to pay that employee a set amount of money in exchange for the release of the right to sue.

An employee may also be required by an employer to sign a release form to relinquish the right to take legal action for future claims from an injury that occurred while the employee was at work. In this example, the employer would need to provide consideration, or payment of a set amount of money, in exchange for the release of the right to sue.

What Does General Release Agreement Mean?

This legally binding document waives the right of the person signing it to make any claims against another party. In an employment sense, an employee would waive their right to take legal action for any claims related to separation or termination of employment. If executive-level employees do not wish to sign the agreement as part of employment, that is up to them and their discretion.

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