An exculpatory clause is a provision in a lease that relieves one or multiple parties of liability from the other party’s error or wrongdoing.
For example, an exculpatory clause would relieve a landlord of any damages sustained by a tenant who is leasing the property. This does not excuse landlords from negligent actions, fraud, or violations of the law, however.
Typically, the party who wishes to be relieved of liability initiates an exculpatory clause.
Detail of Exculpatory Clause
An exculpatory clause is a provision in a formalized agreement whereby one or two things occur. Either the party drafting the provision is legally relieved of something or the party receiving the contract is relieved of an act they committed.
A common example of an exculpatory clause is a parking ticket receipt which states that the parking lot is freed from any damages that may occur the car of someone using the parking lot. Essentially, the parking receipt is an exemption from liability for car damages. Another example might be a dry-cleaning receipt that states that the dry cleaner is exempt from liability should their client’s clothing get damaged.
Enforcing an Exculpatory Clause
Not all exculpatory clauses are enforceable because they can be deemed unfair, particularly when the damaged party has no choice but to accept it. Why might they have no choice but to accept it? Using the parking lot example, the driver entering the parking lot is forced to take the ticket to inside the lot and they have almost no chance to exit the law because doing so would require the driver to backout of the lot which would oftentimes be impossible particularly when someone might be behind them.
In reality an exculpatory clause relieves one party of any liability regardless of what it causes another party. The purpose of the clause is to exempt a party from wrongdoing that was not intentional.
Examples of Exculpatory Clauses
Parking lot liability for damages. The parking lot would be exempt from damages
Drycleaner for clothing damages. The drycleaner has no liability if their client’s clothing are damaged
Lease provision for injuries. Property’s might have a pool , public area, and others that the landlord is exempt from liability
Checking in a bag or coat. The restaurant or venue where the person checked in a bag or coat is exempt from liability if the coat or bag is damaged, lost, or stolen
Enforcing an Exculpatory Clause
Exculpatory clauses are enforceable if they are reasonable. For example, in the case of a parking lot, it would be reasonable for the parking lot not to assume damage if someone’s car is damaged because the parking lot cannot be expected to help other drivers avoid hitting anyone’s car. Unreasonable or unconscionable clauses are not enforceable.
An exculpatory clause should have clear and easy to understand provisions that make it simple enough for a normal person to understand. Most people are not lawyers and therefore it is not reasonable if the provision is in extra small text size or have confusing or conflicting terms.
Case Law That Relates to Exculpatory Clauses
Case Review: Burnett v. Chimney Sweep (2004)
The case, Burnett v. Chimney Sweep (2004) 123 Cal.4th 1057., involved a dispute regarding an exculpatory clause.
A couple (the Burnetts) signed a commercial lease with a landlord (Chimney Sweep). The lease included an exculpatory clause which required the Burnetts to waive the right to hold Chimney Sweep liable for any injury resulting from leasing the property (except in the instance of negligence). When the Burnetts moved into the property, they discovered water stains, the existence of excessive moisture, and mold and mildew growths. The Burnetts informed Chimney Sweep of the damages, but the landlord refused to repair them. The Burnetts filed a complaint for general negligence and negligent maintenance.
The Superior Court argued that the lease’s exculpatory clause freed Chimney Sweep from liability. It ruled in favor of Chimney Sweep. The Burnetts appealed. The Court of Appeals argued that the exculpatory clause applied only to passive negligence, not to active negligence. Chimney Sweep had actively avoided and refused to fix the excessive moisture and mildew/mold growth. Therefore, the court reversed the lower court’s ruling and ruled in favor of the Burnetts.
