The Minnesota Supreme Court Holds that Exculpatory Clauses Seeking Waiver of Damages Caused by a Company’s Own Negligence are Subject to Strict Construction

by Elizabeth Roff

On September 21, 2022, the Minnesota Supreme Court issued its decision in Justice v. Marvel, LLC d/b/a Pump It Up Parties clarifying the rules of interpretation for exculpatory clauses. An exculpatory clause is a contract provision that relieves a party of liability for damages if caused during the term of the contract; all the risk is transferred to one party. For example, a ski resort may have skiers sign a contract with an exculpatory provision relieving the resort of any liability if the skier gets injured.

In Justice, the plaintiff was injured as a minor at an indoor play center, Pump It Up Parties, when he fell from a bounce house and hit his head on the floor. The floor was concrete, covered in commercial-grade carpet. After turning 18, Justice sued Pump It Up Parties, claiming that Pump It Up Parties was negligent in not having pads on the floor near the inflatables. Justice’s parent signed a waiver that included the following exculpatory clause:

[Justice agreed] to release and hold harmless [Pump It Up Parties] … from and against any and all claims, injuries, liabilities or damages arising out of or related to our participation in any and all Pump It Up programs, activities, parties, the use of the play area and/or inflatable equipment. … [Justice acknowledged the] inherent risks associated with participation in Pump It Up programs, parties, and/or use of the play area and inflatable equipment … and [Justice] knowingly and freely assume[d] all such risks, both known and unknown, including those that may arise out of the negligence of other participants.

Pump It Up Parties argued that Justice’s negligence claim fell within the scope of the claims waived by the above exculpatory clause. Justice argued that the exculpatory clause should be deemed unenforceable because it did not pass the strict construction test. The Minnesota Supreme Court ultimately agreed with Justice.

In reaching its decision, the Court applied the same strict construction test applicable to indemnity agreements. In an indemnity agreement, one party agrees to pay for the damages caused by the other party’s fault. For example, in a subcontract agreement, the subcontractor may agree to indemnify the general contractor for damages caused by the subcontractor. Some indemnity agreements attempt to relieve a party of all fault, even if caused by that party’s negligence. This is referred to as “broad form” indemnity. To be enforceable, broad form indemnity clauses must pass the strict construction test. For an indemnity clause to pass strict construction, the contract must include an express provision that indemnity includes damages caused by the indemnitee’s own negligence. Indemnity cannot be established by implication. The Court extended this rule to exculpatory clauses.

Therefore, an exculpatory clause that releases a party from “any and all claims” is not enforceable against a claim for negligence absent language that sufficiently expresses a clear and unequivocal intent to release the party from that party’s own negligence. The exculpatory clause in Justice mentioned only the negligence of other participants—not the negligence of Pump It Up Parties. The exculpatory clause thus did not clearly and unequivocally communicate intent to release Pump It Up Parties from its own negligence to Justice.

Moving forward, companies that require patrons to sign contracts with exculpatory clauses must include language specifically informing the patron that they are waiving their right to sue for damages caused by the companies’ own negligence. Any company seeking waiver of damages caused by its own negligence should verify compliance with Justice.

As the dissent pointed out, “the settled expectations upset by the court here extend well beyond just these two parties.” Exculpatory clauses are common in a plethora of routine and recreational activities (e.g., fitness center, skiing, valets, dry cleaning, mortgages, and leases). Justice creates uncertainty in the enforcement of exculpatory clauses in contracts signed before the decision.


Read the case: Justice v. Marvel, LLC d/b/a Pump It Up Parties