Section 24 Limitation of Liability and Damages Clauses

• Library: Prof Liability 2005

While a contractual clause limiting a party’s future liability for its negligent acts is not exactly the same as a clause totally exonerating a party from its future negligent conduct, Missouri courts have traditionally considered both such clauses as “exculpatory clauses.” The lack of a distinction is significant, given the interpretation placed on such clauses. Generally, exculpatory clauses in contracts are disfavored under the law in Missouri, and such contract provisions are strictly construed against the party claiming the benefit of the clause. Alack v. Vic Tanny Int’l of Mo., Inc., 923 S.W.2d 330, 334 (Mo. banc 1996). Generally speaking, to effectively contractually release or limit a party’s future negligence, the language at issue must be:

• clear
• unambiguous
• unmistakable; and
• conspicuous

Id. at 337.

While Missouri courts historically only sparingly uphold limitation of liability clauses—see, e.g., Verango v. Facility Mgmt. of Mo., Inc., 895 S.W.2d 126 (Mo. App. E.D. 1995) (upholding a hold harmless agreement in favor of the St. Louis Arena for injuries sustained by an ice skater who signed a general release of all liability); Warren v. Paragon Techs. Group, Inc., 950 S.W.2d 844 (Mo. banc 1997) (upholding a release of liability clause contained in a written lease agreement between a tenant and apartment complex)—invalidating these clauses based on their noncompliance with one or more of the four factors enumerated above, recent trends favor them.

Cases enforcing exculpatory clauses focus on the simple, clear, and unambiguous nature of the release at issue. Furthermore, the language must specifically state that it is a release of future “negligence” in order for the clause to be an effective waiver. General language releasing future claims will not suffice to release allegations of negligence unless it is specifically mentioned.

There must also be evidence of relatively equal bargaining power during contract negotiation and not a “take it or leave it” agreement. Some courts have held that, in the absence of evidence of negotiation over the clause at issue, it will not be enforced. While it was the law in the past that evidence of separate consideration was necessary to enforce the limitation of liability clause, see, e.g., Schaffer v. Prop. Evaluations, Inc., 854 S.W.2d 493, 495 (Mo. App. E.D. 1993), that is no longer the case, and the policy has shifted to one of general acceptance of these clauses.

The most recent case on this issue is Purcell Tire & Rubber Co. v. Executive Beechcraft, Inc., 59 S.W.3d 505 (Mo. banc 2001). Purcell Tire & Rubber Co. dealt with a limitation of liability clause in an inspection agreement between the purchaser of an aircraft and the inspection company hired to prepare an inspection report of the craft before it was purchased.

The president of Purcell Tire contacted Executive Beechcraft about inspecting a pre-owned plane. They faxed him a three-page contract in 11 point...