Kentucky business owners rely on their contracts to help them successfully run their business. Lawsuits cost time and money and can potentially damage your business.
One way to remedy this is through an exculpatory clause. An exculpatory clause is specific language added to a business contract that attempts to release one party of blame or liability.
An example of an exculpatory clause
Exculpatory clauses are often found in contracts between a business and a client or consumer.
For example, if you run a business that involves some type of inherent risk to a customer, such as a skydiving business, you might include an exculpatory clause in your contract stating that your business cannot be held liable if the customer is injured while skydiving.
Exculpatory clause requirements in Kentucky
Exculpatory clauses are allowable in Kentucky contracts. However, there are some requirements. The clause must clearly and specifically indicate an intent to release a party from liability for a personal injury caused by that party’s own conduct.
The clause must express this intent by using the word “negligence” and protection against negligence must be the only reasonable interpretation of the contract language. Finally, the hazard experienced must have been contemplated by the provision.
Why your exculpatory clause may still not hold up in court
Even if your exculpatory clause meets all the requirements, a court could declare it unenforceable. Some reasons for declaring it unenforceable could include the language not being specific enough or the clause not being clear and conspicuous.
For example, if your contract is written in large bold type and the exculpatory clause language is buried in between other language and written in small, hard to read type, a court might declare it unenforceable because it is too easy for the other side to miss.
When drafting your exculpatory clauses, it is best to have guidance to ensure they will be legally enforceable if challenged.