Too many contracts can void each other out; two releases signed at different times can render both releases void.Posted: January 14, 2015
Upon signing the second release the first is void based on Novation and the second is void because there is not consideration for the second release.
Example I: You sign a release electronically to participate in an activity. Upon arrival, the outfitter of the activity has you sign a paper release.
Example II: You sign up with a rec center to go skiing. The rec center has you sign a release and when you get to the activity, the ski area has you sign a release. Both releases stop lawsuits for skiing accidents but one protects the rec center, and one protects the ski area. Each release has different language.
Novation is a legal term that states that once you sign a second identical or similar contract to the first contract the second contract voids the first contract based on Novation. Terms such as the amount due, interest owed, etc., can be different as long as the basic agreement is the same, and the parties are generally the same.
An agreement of parties to a contract to substitute a new contract for the old one. It extinguishes (cancels) the old agreement. A novation is often used when the parties find that payments or performance cannot be made under the terms of the original agreement, or the debtor will be forced to default or go into bankruptcy unless the debt is restructured.
The voluntary substitution of a new contract for an old one, usually to change the parties, duties, or payment terms.
Black’s Law Dictionary defines Novation as:
A contract that (1) immediately discharges either a previous contractual duty or a duty, (2) creates a new contractual duty, and (3) includes as a party one who neither owed the previous duty nor was entitled to its performance.
Many definitions of Novation include the word debt, meaning an obligation to repay, a promissory note, but not all definitions do. One argument to make is the Novation does not apply to a release because it is not a debt.
In the first example, Novation could be argued to void the first release. A new agreement has been signed, which then cancels the first agreement.
In the second example, if the parties are the same or similar and the intent of the release is the same, then it is possible that one can argue that a novation occurred canceling the first release.
In the second agreement if the group is a Youth Group that is taking kids skiing, the youth group release includes the ski area as a released party the signature on the ski area release may cancel the youth group release.
Consideration is the second issue. For a contract to be valid, something of value must flow both ways in the contract. Normally, this means one side gives the other side money, and the other side provides a service or a thing of value. You give a ski area money, and the ski area gives you access to their lifts and ski area.
2) a vital element in the law of contracts, consideration is a benefit which must be bargained for between the parties, and is the essential reason for a party entering into a contract. Consideration must be of value (at least to the parties), and is exchanged for the performance or promise of performance by the other party (such performance itself is consideration). In a contract, one consideration (thing given) is exchanged for another consideration. Not doing an act (forbearance) can be consideration, such as “I will pay you $1,000 not to build a road next to my fence.” Sometimes consideration is “nominal,” meaning it is stated for form only, such as “$10 as consideration for conveyance of title,” which is used to hide the true amount being paid. Contracts may become unenforceable or rescindable (undone by rescission) for “failure of consideration” when the intended consideration is found to be worth less than expected, is damaged or destroyed, or performance is not made properly (as when the mechanic does not make the car run properly).
A benefit or right for which the parties to a contract must bargain. In order to be valid, a contract must be founded on an exchange of one form of consideration for another. Consideration may be a promise to perform a certain act — for example, a promise to fix a leaky roof in return for a payment of $1,000 — or a promise not to do something, such as build a second story on a house that will block the neighbor’s view (in return for money or something else). Whatever its particulars, consideration must be something of value to the people who are making the contract, even if the value is very low.
Black’s Law Dictionary defines Consideration as:
Something (such as an act, a forbearance, or a return promise) bargained for and received by a promisor from a promisee; that which motivates a person to do something. Consideration or a substitute such as promissory estoppel, is necessary for an agreement to be enforceable.
If you paid your money for the activity in Example, I when you signed up and you do not pay more money when you signed the second release OR what you received when you signed the second release was no different than what you received when you signed the first, there was no consideration or no new consideration. Without new or additional consideration, the second agreement is void.
The second Example is quite interesting based on consideration. If you paid the ski area directly for your lift ticket, then there might not be any consideration for the release you signed with the rec center. If you paid the rec center for the lift ticket and the rec center did not receive any of the money, there might be an issue of consideration to the ski area. The rec center would argue as a non-profit they are not supposed to make money or the taxes paid by the person who signed up covered the consideration.
If the rec center bought 2 dozen tickets from the ski area and paid the ski area and then resold them to the participants, then the ski area release would not have any consideration, and the second release would be void. The contract with consideration was between the rec center and the ski area.
If the rec center took the money and had a guest sign their release, then took the money to the ski area which gave the rec center a lift ticket for the people who had signed up, then there would be a contract between the parties, the guest, the rec center and the ski area, however, whether or not the consideration went the right way and to the right people for the right agreement is best determined by an Ouija board or a judge.
Now, if both contracts are signed at the same time, then the consideration may not be an issue, and novation is not an issue. If you have no choice but to use two releases, then have them signed at the same place at the same time.
The decision in Forman v. Brown, d/b/a Brown’s Royal Gorge Rafting, 944 P.2d 559; 1996 Colo. App. LEXIS 343, the dissent argued that the two different contracts signed at the same time cancelled each other out. One was a release, the second contract was titled “On River Prohibitions.” The act which caused the injury to the plaintiff in Forman was prohibited in the On River Prohibitions. Because the two contracts were in conflict and the plaintiff was encouraged to jump in the river, the prohibited act, the dissenting judge felt the release was void.
If you are an outfitter working with business, programs or non-profits brining groups to you, then offer to have everyone sign your release, (if it is a well-written release) and specifically include the group, program, business and/or non-profit in your release. You can sell this as a benefit that you have provided them with a well-written document that provides protection for everyone.
If you have your guests, sign releases electronically, then set up your system so you are comfortable with the system, and you know that someone has signed. That means if they have paid, they have signed the release. They can’t pay without signing the release.
You do have a problem then you need to write a new release so that it takes into account the novation and consideration issues in the new agreement. You have a client who swears they sent you a signed release. However, you do not have a copy. Get a paper copy of the release and write on it that the guest is signing the new release because the old one was lost and the consideration for the new release was the $XX paid to go rafting paid on XX day of XXX month 2015. Have the guest sign the release, and the additional language added the release. However, doing this is extremely risky.
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