AOPA Pilot Magazine - November 2018 - 28

FOR THE RECORD

Hold for release...of liability

BY JARED ALLEN

Beware signing away your legal rights

JARED ALLEN is

AOPA's Legal
Services Plan senior
staff attorney and is
an instrument-rated
private pilot.

BE CAREFUL WHENEVER YOU'RE CONFRONTED with documents to sign for the purchase of an aircraft, avionics,
parts, software updates, or extended warranties. Read
them completely. By signing these documents, you may
be agreeing to terms that could affect your legal rights in
the event of an accident, compromise insurance coverage, and even make you liable for the seller's legal bills.
As sellers of all kinds attempt to shield themselves
from liability, prospective buyers are being presented
with agreements that aim to have the buyer give up certain rights in exchange for using a service or purchasing
a product. The terms differ, but the common intent is for
the buyer to relinquish any right to hold the seller legally
responsible if the service or product is involved in an
event resulting in injuries, death, or property damage.
Commonly called a waiver or release, these exculpatory
clauses can be in a sales contract or a separate document.
Consider a sales contract for a kit aircraft that was at
the center of a case heard by the U.S. Court of Appeals
in 1986. The builder of the kit aircraft, who was also the
pilot, was injured when it crashed on takeoff. He sued
the seller of the kit, alleging negligence, product liability,
and warranty claims. The seller asserted that the builder
waived these claims when he signed the sales contract.
The sales contract provided that the seller "is not
responsible, and makes no warranties, express or
implied whatsoever, regarding the structural integrity,
performance, flight characteristics, or safety of the buyer's completed aircraft and its component parts.... Buyer
expressly waives any and all claims arising from structural
integrity, performance, flight characteristics, mechanical
failures, and safety... Buyer acknowledges awareness of
the risks of flying a homebuilt aircraft."
Are these types of exculpatory clauses enforceable?
It depends. State laws and case precedent vary widely. In
this case, the court was guided by case law to determine
if the contract was "unconscionable" (unjust or extremely
one-sided in favor of the party having superior bargaining
power), and whether the exculpatory clause was valid.
Closely examining the circumstances surrounding
the contract, the court found that it was not unconscionable. Particularly significant to the court was that
the simple, one-page contract used plain language that
the builder had made his own changes to, which the
seller accepted. The court held that given the builder's
"expertise with respect to airplanes, his ability with
woodworking, his awareness of the recreational nature

28 | AOPA PILOT November 2018

of a home-built aircraft, his thorough investigation of
the...aircraft prior to ordering it, his modification of the
sales agreement, coupled with all of the circumstances
surrounding the formation of the contract, we do not
view the disclaimer provision as unconscionable."
The court also enforced the exculpatory clause
because the seller did not have any legal obligation to the
public, the nature of the contract was for the sale of unassembled goods, and the purchaser had the opportunity
to buy a similar kit elsewhere. Furthermore, the contract
was fairly entered into and the intention of the parties
was expressed in clear and unambiguous language.
However, one question left unanswered by the court
was if the state's law allowed strict product liability claims
to be barred by an exculpatory clause. In strict product
liability, the focus is on the defective nature of a product
rather than the conduct of the parties involved.
An unrelated case, heard by the state supreme court
many years later, sheds light on the answer to this question. In deciding whether a strict product liability claim
against a tanning-bed manufacturer was barred by a
release a customer had signed to use the tanning facilities,
the court held "that an agreement releasing a manufacturer from strict product liability for personal injury, in
exchange for nothing more than an individual consumer's right to have or use the product, necessarily violates
the public policy of this jurisdiction and is void."
There may be other reasons not to agree to these
clauses. Many insurance policies restrict or prohibit the
insured's ability to waive subrogation rights of the insurance company, so agreeing to an exculpatory clause could
jeopardize the policy's effectiveness. Likewise, indemnification clauses that often accompany waivers or releases
seek to make the purchaser pay for the seller's litigation
expenses or attorney fees in the event of a legal dispute.
Once again, state law plays a significant role in determining the enforceability of indemnification clauses.
For these reasons, you should never willingly
sign a contract without fully understanding its terms.
Consider having any proposed contract reviewed by an
experienced attorney, who may also be able to help you
negotiate more favorable terms.
AOPA
EMAIL jared.allen@aopa.org

The AOPA Legal Services plan is offered as part of AOPA's
Pilot Protection Services (www.aopa.org/pps).

http://www.aopa.org/pps

AOPA Pilot Magazine - November 2018

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