Lying in a release can get your release thrown out by the court.

Smoky, Inc. v. McCray et al., 196 Ga. App. 650; 396 S.E.2d 794; 1990 Ga. App. LEXIS 1023

Don’t lie!.

This Georgia case looks at the issues when the defendant misleads or lies to the guest and that lie is material to the heart of the case. The plaintiff was taking horseback riding lessons from the defendant. The plaintiff sued for injuries she received during a riding lesson. The defendant filed a motion for summary judgment which was granted by the trial court based on the release (exculpatory contract) signed by the plaintiff.

The plaintiff appealed. The court reviewed the release and found the release contained statement that the defendant did not have liability insurance and that was the reason why the release was needed.

“IT IS EXPRESSLY UNDERSTOOD by the undersigned that Burgundy Ridge Farms, Inc., Peter W. Nathan, Joseph and Kathleen Patton, have no insurance covering equestrian activities and that the undersigned would not be permitted to engage in equestrian activities without this release whereby the undersigned irregardless of fault, agrees to fully release Burgundy Ridge [*209] Farms, Inc., Peter W. Nathan, Joseph and Kathleen Patton and their employees and agents from any and all responsibility as a result of accident or injury.”

Of course after her injury the plaintiff learned the defendant did have insurance. Originally the defendant did not have insurance, however after getting insurance the defendant continued to use the release stating the defendant had no insurance.
The appellate court held that the actions of the defendant were fraudulent misrepresentation. Fraudulent misrepresentation was defined by the court as:

…elements of fraudulent misrepresentation rendering a contract voidable are: (1) there must be a statement of fact which is untrue; (2) the false statement must be made with intent to defraud and for the purpose of inducing the other party to act upon it; and (3) the other party must rely on the false statement and must be induced thereby to act to his injury or damage.

Because under Georgia and most other state laws, exculpatory contracts (releases) are not favored, releases are strictly construed against the party seeking to enforce the release. That means that any issue interpreting the release will be ruled in favor of the plaintiff attempting to get the release thrown out. Here the court looked at whether the release violated public policy and found

… exculpatory contracts have been declared void on public policy grounds: a contract arises out of a business generally thought suitable for public regulation; the party seeking exculpation is engaged in performing a service of great importance to the public; the party seeking exculpation holds itself out as willing to give reasonable public service to all who apply; and the party invoking exculpation possesses a decisive advantage of bargaining strength.

Although the court examined the public policy argument, the ultimate decision point was the fact the release was signed based on a misstatement of fact. The fact was the defendant did have insurance when the release said the defendant did not have insurance.

There can be no question that a statement that the defendants have no insurance protection is highly relevant to a reasonable student’s decision to sign a contract which allocates to the student the losses arising out of equestrian activities.
When the party seeking an exculpatory contract includes in the contract a false statement about a fact which is relevant to a reasonable person’s decision whether to execute a release allocating losses, the principles of contract law do not weigh heavily in favor of enforcement of the exculpatory contract, and the goals of tort law weigh against enforcement of the exculpatory contract.

The court then went on and stated:

If we were to enforce an exculpatory contract based on a false statement of fact relevant to a reasonable person’s decision whether to execute the release, we would open the door to sharp practice. Misstatements by the party seeking the release raise the strong suspicion of inequitable motive and overreaching and of lack of good faith or fair dealing on the part of the party seeking the release and of oppression of the party executing the release.

The court held the misstatement was enough to throw out the release. The decision of the lower court was reversed and the case was sent back down for trial.

So? Summary of the case

Courts are always looking for ways to void a release. The law requires it. Releases are not favored by the court and to be strictly construed. Any mistaken in the document, in any contract, can void the release.

So Now What? (Motivational get them to do something post)

Releases need to be written correctly. Make sure that:

• · Your release is written to match the facts and needs of your operation.
• · Your release has not facts or statements that are not 100% correct
• · Your marketing and advertising do not make statements that are contrary to your release.

Your release is not a standalone document. It must conform to your other contracts and your insurance policy. It must be written for your operation and your guests. And it must be part of your overall marketing and risk management plan.

What do you think? Leave a comment.

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