Key Takeaways

  • A general release is a legally binding document that prevents the releasor from pursuing future claims against the releasee.
  • It is commonly used in business, employment, personal injury, and contract disputes.
  • General releases must include consideration (something of value in exchange) to be valid.
  • There are different types of releases, including those related to contract liability, tort claims, and employment disputes.
  • Specific legal wording and enforceability can vary depending on the jurisdiction.
  • Some general releases may not cover unknown claims unless explicitly stated.
  • Consulting a legal professional before signing a general release is highly recommended.

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

When Is a General Release Used?

A general release is commonly used in various legal and business situations, including:

  • Business settlements: A business owner may require a general release to resolve disputes with vendors, customers, or partners.
  • Employment terminations: Employers often use general releases to prevent former employees from suing for wrongful termination, discrimination, or unpaid wages.
  • Personal injury cases: When a party receives a settlement for an injury, they usually sign a general release waiving the right to further legal claims.
  • Property damage disputes: If a property owner is compensated for damage, they may sign a general release to close the matter.
  • Debt settlements: A creditor may agree to accept partial payment in exchange for a release of future claims on the remaining debt.

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.

What Should Be Included in a General Release?

For a general release to be legally valid and enforceable, it should include the following key elements:

  • Identification of Parties: Clearly state the names and roles of the releasor (person waiving rights) and releasee (party being released).
  • Scope of Release: Detail the specific claims, disputes, or liabilities being waived. Some releases specify certain claims, while others cover all past, present, and future claims.
  • Consideration: The release must provide something of value to the releasor, such as monetary compensation or another benefit.
  • Jurisdiction Clause: Indicate which state’s laws govern the agreement. This is crucial as different states have different legal standards for enforceability.
  • Confidentiality and Non-Disparagement: In some cases, a general release may include a confidentiality clause preventing the parties from discussing the details of the settlement.
  • Signatures: The document must be signed by all parties involved and sometimes notarized for additional legal protection.

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.

Limitations and Exceptions to General Releases

While a general release is designed to prevent future claims, there are important limitations and exceptions:

  • Fraud and Misrepresentation: If the release was signed under fraudulent circumstances or with incomplete information, it may be invalid.
  • Unknown Claims: Some jurisdictions do not allow a general release to waive unknown claims unless specific legal language is included.
  • Public Policy Considerations: Certain legal rights, such as workers' compensation claims, may not be waived through a general release.
  • Duress or Coercion: If a party was forced or pressured into signing a release, it may not be enforceable.
  • Mutual vs. One-Sided Releases: Some agreements require both parties to release claims, while others only benefit one side. It’s essential to review the document carefully.

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.

Frequently Asked Questions

  1. What is a general release in legal terms?
    A general release is a legal document in which one party waives their right to bring any future claims against another party in exchange for something of value.
  2. Is a general release legally binding?
    Yes, as long as it meets legal requirements such as consideration, clear wording, and voluntary agreement.
  3. Can a general release be revoked?
    Generally, once signed, a general release is final. However, if fraud, coercion, or misrepresentation is involved, it may be challenged in court.
  4. Do I need a lawyer to sign a general release?
    While not legally required, it is highly advisable to consult a lawyer to ensure you understand the rights you are waiving.
  5. What is the difference between a general release and a settlement agreement?
    A general release waives claims, while a settlement agreement may contain additional terms such as confidentiality or specific obligations for both parties.

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