Exculpatory Clauses: Can They Protect You?

• Published date: 03 October 2022
• Subject Matter: Litigation, Mediation & Arbitration, Trials & Appeals & Compensation, Professional Negligence
• Law Firm: Barrett McNagny
• Author: Lauren R. Minke

Much like waivers and releases, Indiana courts have long recognized the validity of exculpatory contracts in which parties agree in advance that one is under no obligation of care for the benefit of the other and shall not be liable for the consequences of conduct which would otherwise be negligent. Shumate v. Lycan, 675 N.E.2d 749, 752 (Ind. Ct. App. 1997) (citing LaFrenz v. Lake City Fair Bd., 360 N.E.2d 604, 607 (Ind. Ct. App. 1977)). It is well-settled in Indiana that exculpatory contracts are not against public policy. United State Auto Club (USAC) v. Smith, 717 N.E.2d 919 (Ind. Ct. App. 1999). Generally, parties are permitted to agree that a party owes no obligation of care for the benefit of another, and thus, shall not be liable for consequences that would otherwise be considered negligent. Wabash County YMCA v. Thompson, 975 N.E.2d 362 (Ind. Ct. App. 2012) (citing Marsh v. Dixon, 707 N.E.2d 998, 1000 (Ind. Ct. App. 1999)).

However, Indiana courts have held that an exculpatory clause, a clause within a contract, will not act to absolve a party from liability unless it "specifically and explicitly refer[s] to the negligence of the party seeking release from liability." Marsh, 707 N.E.2d at 1000 (quoting Powell v. Am. Health Fitness Ctr. of Fort Wayne, Inc., 694 N.E.2d 757, 761 (Ind. Ct. App. 1998)).

An exculpatory clause may be found sufficiently specific and explicit on the issue of negligence even in...