Guest Column - August 2010
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Contracts

Muscling Up an Effective Contract

By David S. Blatteis, Esq. and Andrew D. Linden, Esq.


Exculpatory agreements, and adhesion contracts, such as the defendant's agreement, are closely scrutinized and invalid if they violate public policy. An exculpatory agreement does not violate public policy if: the agreement does not adversely affect public interest; the exculpated party does not have a legal duty to perform; it does not pertain to a utility or common carrier; and it is not the product of unequal bargaining power or otherwise unconscionable.

Concentrating on the first and second factors, the Appellate Division again recognized that all business establishments owe a duty of care to their patrons. The court further acknowledged, however, that physical fitness was an important policy objective, which was beneficially promoted by fitness centers.

The court agreed with the defendant that health clubs need the protection of exculpatory agreements due to the potential for significant financial liability stemming from injuries that could occur in the safest of fitness centers. There is simply no way to avoid all injuries associated with working out and exercise. If health clubs were not protected from lawsuits for injuries, membership costs could become excessive or health clubs could ultimately be eliminated from the marketplace. If not for exculpatory agreements, the fitness centers would likely face a barrage of lawsuits related to accidents arising from ordinary wear-and-tear of exercise machines. This would undermine the public policy of promoting physical fitness. The court concluded that the defendant's exculpatory agreement was legally enforceable and consistent with public policy—but would it protect the defendant under the circumstances?

Although the exculpatory agreement was valid and enforceable, it did not give rise to a complete waiver of liability for the defendant. The defendant's exculpatory agreement could not protect it from acts or omissions that went beyond mere negligence and entered the realm of reckless behavior. Accordingly, the court evaluated the degree of the defendant's fault.

The proofs submitted by the parties failed to explain why the bike's handlebars became detached. The plaintiff's expert did not allege that the defendant's omissions were reckless and it was likely that the design of the bike caused the handlebars to become detached. The court explained that the instructor's failure to check the plaintiff's handlebars could be no worse than a careless omission. Likewise, if the defendant's cleaning or maintenance crew inadvertently caused the handlebars to become unsecured, this could only be simple negligence. There was no evidence that the defendant repeatedly failed to maintain the safety of its equipment. Thus, the court found that the defendant's acts were not reckless, and could only be described as negligent. Because the defendant's acts were merely negligent, the defendant was protected by its exculpatory agreement, and the trial court's order in favor of the defendant was affirmed.

This case serves as a reminder to fitness center owners about the value of proper exculpatory agreements and taking the proper precautions to protect their business from liability.



ABOUT THE AUTHORS

David Blatteis is a member of the law firm Norris, McLaughlin & Marcus, P.A., specializing in all aspects of corporate law. As a business lawyer, he represents corporate clients in a wide range of commercial transactions.

Andrew Linden is an associate and practices in the firm's Litigation and Appellate Practice Groups. He is a former clerk for the New Jersey Superior Court - Appellate Division and is a part-time indoor cycling instructor. Norris McLaughlin & Marcus is a full-service law firm with more than 150 attorneys in offices located in Bridgewater, N.J.; New York; and Allentown, Pa.