Liability Contract: Everything You Need to Know
The settlement typically has some sort of financial compensation in exchange for agreeing to not take legal action. There are any number of circumstances in which parties may enter into a liability contract.3 min read
A liability contract is a way to settle a legal dispute out of court, as all parties agree to waive a legal claim. A liability contract may also be referred to as the following:
- Release Form
- Release Agreement
- Liability Release
- Liability Waiver
- Waiver of Liability
The settlement typically has some sort of financial compensation in exchange for agreeing to not take legal action. There are any number of circumstances in which parties may enter into a liability contract. Many times celebrities, such as actors, athletes, and politicians, who are accused of wrongdoing will provide monetary compensation to their accuser in exchange for the wronged party not filing a lawsuit and possibly making the accusation public knowledge; after all, court filings are public information.
Additionally, this may be enacted in advance. For example, you may be asked to sign a waiver of liability prior to engaging in a high-risk activity, such as bungee jumping or skydiving; the result being that should you become injured, you cannot take legal action against the company facilitating the activity. This type of waiver is customarily referred to as a Waiver of Participation.
Why Is a Release of Liability Used
The primary purpose of a release of liability is to ensure that a person or party is not held liable in the event of an accident or other injury-causing incident. Ways in which it can be useful include:
- Releasing a contractor whom you hire to paint your house from liability for any damage done to your rose bushes.
- Compensating the other driver with whom you were in a car accident, thus relieving you of liability.
- Ensuring that you or your parasailing company cannot be held liable should someone hurt themselves.
What Should Be Included on a Release Form?
As with any type of legal document, there are some key points that you will want to ensure you include on a release agreement. Among them, are:
- What type of liability release is it?
- The names and contact information of all parties.
- Details about the incident that took place (or will take place in the event of signing a liability waiver, in advance).
- The agreed-upon amount of the compensation that is being paid.
- The date on which the release agreement is being made effective, which is essentially the date that it is being signed by all involved parties.
- The state in which this agreement is taking place, along with assurances that the agreement is in accordance with the laws and policies set forth by that particular jurisdiction.
When Might I Need a Release of Liability?
Often, this is a legal document that people don’t think about until it is too late. Certainly, no one wants to think about a client or customer injuring themselves at your health club or getting into a car accident and being sued by the other motorist. However, given the litigious society in which we live, combined with basic human nature, there are certainly those times in which you may want to consider a release of liability.
The first thing to know is that there are two different types: general release and mutual release. The key differences among them are:
- In a general release, one party forfeits all legal claims against the other party.
- In a mutual release, both parties act as both the releasor and the releasee, and each agrees to forfeit any and all legal claims.
A car accident release, which is obviously used in the case of car accidents, is essentially a more specific version of either the general or the mutual release. In the car accident release, one or both parties are agreeing to not take legal action, but rather meet and agree to some type of financial compensation. Generally, a car accident waiver also prevents one party from seeking continued or ongoing financial compensation from the other; once the initial agreement has been reached, the deal is essentially done.
Additionally, property damage waivers are quite common in real estate and contracting. They provide protection should personal property such as antiques, works of fine art, jewelry, and the like become damaged during such occasion as having work done around your home or yard. It may also provide protection for the contractor, in terms of what you are able to sue for, should such damages occur.
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