Liability Waivers: How They Can Help Your Business

Whenever you do business, there's a risk that customers could suffer harm. In turn, there's a risk they could try to hold you responsible for that harm.

A liability waiver establishes up front that you are not responsible for that harm. This type of waiver may reduce the chance of a customer taking legal action against you and the chance of them winning if they do.

Here's what you need to know about liability waivers, what their benefits are, and how you can create and display your own.

What is Liability?

Liability is a legal term for responsibility, most usually for harm. In the context of a liability waiver, it covers harm resulting from your actions (or lack of actions) when providing goods or services. This harm could be physical, financial or something else such as damage to reputation.

What is a Liability Waiver?

A liability waiver is a document (or clause in a wider document) which establishes that you are not liable for something.

A liability waiver becomes part of the terms on which you and a customer do business. This means they accept you are not liable, and they waive any rights they may have to seek damages.

To put it simply, a liability waiver's purpose is to tell customers about risks and have them accept those risks, rather than hold you responsible for what results because of the risks.

Some businesses use other terms such as a "hold harmless agreement" or a "release form". What really matters is that you and the customer are both clear about the consequences and implications if they suffer harm. Using the term "liability waiver" is the best way to be clear about the document's purpose.

A liability waiver is slightly different to a "limitation of liability" clause. A liability waiver is focused more on saying you are not responsible for a stated risk or risks. A limitation of liability clause more commonly says you are only responsible for a stated risk, or that your responsibility is limited to a particular amount of money.

Is a Liability Waiver Legally Required?

The law doesn't say you automatically have to publish a liability waiver. Instead, it's a matter of self-preservation and legal certainty.

In other words, you may not legally need one, but you will legally want one.

What are the Benefits of Having a Liability Waiver?

Some benefits of a liability waiver include:

• Letting customers make an informed decision about using your products or services. This can filter out some customers who might otherwise have a bad experience.
• Demonstrating your professionalism and the fact you have considered possible problems.
• Making it easier to get liability insurance for your business.

Not having a liability waiver creates uncertainty about whether or not you are legally responsible for harm a customer suffers. This uncertainty may then have to be settled in court, costing you time and money.

How to Create a Liability Waiver

Exactly what you put in a liability waiver will depend on your business. It will also depend on whether the waiver is a standalone document or part of a wider agreement.

Never simply copy a liability waiver from another business. There's no guarantee their waiver is legally valid or that it's relevant to your specific business and risks.

We've detailed the key points you must cover below. These don't necessarily have to be in separate paragraphs or clauses. Just make sure you cover them all.

What Liabilities the Waiver Covers

Detail the liabilities which are covered by the waiver. You could list specific liabilities or simply say that the waiver means you have no liability.

Remember that your liabilities usually involve risks of harm to the customer. Think carefully about what you include here. If you write this section too narrowly, the waiver might not protect you from enough risks. If you write it too broadly, a court might not rule it is enforceable.

Here's how The University of California lists example risks such as minor injuries to catastrophic ones:

Acceptance of the Liability Waiver

Make clear that you only do business with the customer on the basis that the liability waiver applies. In turn, this means the customer accepts the related risks. Make clear the customer is accepting these risks voluntarily.

Here's an example that uses clear wording that leaves no ambiguity about what the customer is voluntarily accepting:

Consequences of the Liability Waiver

Make clear that by accepting the liability waiver, the customer gives up the right to pursue you for legal damages relating to any relevant harm, loss or damages.

Here's how the University of Oregon highlights this consequence:

Scope of the Liability Waiver

Make clear that the liability waiver covers any damage and isn't limited to the customer and their own property. For example, the waiver would still apply if you hire out equipment and the customer damages a neighbor's property while using the equipment.

Share Bristol makes clear other people and property fall under the scope of the waiver:

Make clear who the liability waiver covers. As well as your business, the waiver should cover other businesses who later take you over, merge with you, or buy you out . As well as the customer, the waiver should cover their heirs or successors.

LVLUP Legal makes clear it is not only the participant who is covered by the waiver:

Notice that the Liability Waiver is Mandatory

Clearly tell the customer not to do business with you unless they are willing to accept the liability waiver.

Cal Poly makes clear that accepting the waiver is a mandatory condition for participating in an activity:

Customer Requirements of the Liability Waiver

List any requirements that customers must follow to limit risk. This could include agreeing to follow all safety instructions, wearing the provided safety equipment or informing you about any relevant health conditions.

McLennan Community College lists several requirements, including that the person has not been advised against participation:

Legal Terms Affecting The Liability Waiver

If you are writing the liability waiver as a standalone document, include any of the following that are relevant:

• Which country or area's law governs your agreement with the customer, including the liability waiver.
• Which court system will hear any case relating to your agreement with the customer, including claims of liability and enforcement of the liability waiver.
• Whether you require the customer to use arbitration or another alternative dispute resolution before or instead of starting legal action. This includes claims of liability and the enforcement of your liability waiver.

Optimist International uses a standard form to customize for the specific state laws that apply:

Can I Put Anything in a Liability Waiver?

Most jurisdictions have some restrictions on what you can include in a liability waiver. This could include:

• A ban on waiving or limiting certain types of liability, for example, those that result from your gross negligence or willful misconduct. Such a waiver may not be enforceable.
• Laws against misleading people about their legal rights, for example by suggesting they can waive the right to take action over some forms of harm.

Check the relevant laws for your jurisdiction and industry. To avoid confusion, liability waivers often include terms such as "to the greatest extent allowable by law." These terms mean a waiver can offer you maximum protection without it appearing you are trying to go beyond what the law allows.

Where Do You Display a Liability Waiver to Make it Effective?

You can either make a liability waiver a standalone document or build it into a larger document such as a Terms and Conditions agreement. Having a standalone document may make it easier to argue that you made it clear and conspicuous.

If you make it a standalone document, make sure you can prove the customer had a reasonable opportunity to read it before starting a legal relationship with you. Make sure also that you can prove the customer actively agreed to it. This could involve:

• A physical signature
• A digital signature
• A checkbox or other way to indicate consent

Make certain that whatever method you use is clearly marked as understanding and agreeing to the liability waiver.

The University of California, Santa Barbara makes the consequences of signing the waiver clear:

If the liability waiver is shorter, you can include it in a Terms and Conditions agreement or similar document. If you do this, make certain:

• The customer cannot start a legal relationship or do business with you until they have agreed to the terms of the document.
• The document is clearly organized so that it's easy to find specific sections including the liability waiver.
• You have drawn the user's attention to the liability waiver. This could be by including it in a table of contents or similar list at the start of the document. You could also explicitly state in the introduction to the Terms and Conditions agreement that it includes a liability waiver.
• You have not done anything that could appear an attempt to downplay or hide the liability waiver such as putting it in a smaller type size or burying it within another section.

AVMA opens its Terms and Conditions by highlighting that it includes a liability waiver:

Request that users agree to your Terms agreement by using a checkbox method of obtaining consent. This will ensure that users are agreeing to your liability waiver as well when it's part of your larger Terms agreement.

Here's an example:

Summary

A liability waiver warns customers of risks in using your products and services and makes clear they accept those risks and cannot hold you responsible for resulting harm. Customers must accept and agree to this as a condition of doing business with you.

A liability waiver may not be enforceable for all risks, depending on local law. It might not cover harm caused by your gross negligence.

Include information about the scope of the waiver, important legal terms, what the waiver means for customers/users, and all other relevant information.

You can make a liability waiver a separate document or build it into a wider document such as a Terms and Conditions agreement. Either way, make it clear and conspicuous and always get a clear indication that the customer understands and accepts the waiver.