Richards v. Richards
181 Wis.2d 1007, 513 N.W.2d 118 (1994)
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Rule of Law:
An exculpatory contract is void as contrary to public policy when a combination of factors demonstrates that it is inequitable, even if no single factor would be dispositive. Such factors include having a dual, unclearly distinguished purpose; being extremely broad and all-inclusive in scope; and being a standardized, non-negotiable adhesion contract.
Facts:
- In February 1990, Leo Richards began working for Monkem Company as an over-the-road truck driver.
- Leo and his wife, Jerilyn Richards, discussed her riding with him as a passenger in his truck.
- Monkem Company required Jerilyn Richards to sign a form titled 'Passenger Authorization' as a condition for her to accompany her husband.
- On or about May 22, 1990, Jerilyn Richards signed the form, which contained extensive language releasing Monkem Company from any and all liability for injuries.
- On June 14, 1990, while Jerilyn Richards was a passenger, the truck driven by her husband overturned while negotiating a curve.
- Jerilyn Richards was pinned inside the overturned truck and sustained physical injuries.
Procedural Posture:
- Jerilyn Richards (plaintiff) filed a lawsuit against Monkem Company (defendant) in the circuit court for Barron County.
- The circuit court granted summary judgment in favor of Monkem Company, dismissing the complaint.
- Jerilyn Richards (appellant) appealed the trial court's judgment to the Wisconsin Court of Appeals.
- The court of appeals affirmed the judgment of the circuit court.
- The Wisconsin Supreme Court granted review of the court of appeals' decision.
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Issue:
Is an exculpatory contract that serves dual purposes, is extremely broad and all-inclusive, and is presented as a standardized, non-negotiable form void as contrary to public policy?
Opinions:
Majority - Abrahamson, J.
Yes, the exculpatory contract is void as contrary to public policy. The contract is unenforceable due to a combination of three factors. First, the contract serves two purposes—authorization and release—which are not clearly identified or distinguished, particularly given its title 'Passenger Authorization,' which obscures its function as a release. Second, the release is extremely broad and all-inclusive, purporting to absolve Monkem and numerous other parties from liability for any injury sustained on any company property or in any vehicle at any time, not just the specific authorized trip. Third, it is a standardized adhesion contract, printed on a company form and offered on a take-it-or-leave-it basis with no opportunity for negotiation. Taken together, these factors demonstrate that the public policy of compensating individuals for injuries resulting from unreasonable conduct outweighs the principle of freedom of contract.
Dissenting - Day, J.
No, the exculpatory contract is not void and should be enforced to the extent it covers the contemplated risks. The majority invents new rules without precedent. First, it is common for a release to serve a dual purpose as a condition for granting permission, and this document was clearly labeled 'FULL AND FINAL RELEASE' multiple times, so any failure to understand it was the plaintiff's own fault for not reading it. Second, under established precedent like Arnold, a broad release is not automatically void; it is simply limited to claims 'within the contemplation of the parties,' which an injury to a passenger in a truck accident clearly is. Third, there is no rule against standardized forms, and the 'unequal bargaining power' rationale does not apply because Monkem was not providing a public necessity but was granting a discretionary favor.
Analysis:
This case establishes a 'totality of the circumstances' or 'combination of factors' approach for evaluating the validity of exculpatory contracts in Wisconsin. It moves away from finding a single fatal flaw and instead allows courts to void a release based on an accumulation of inequitable characteristics. The decision signals to drafters of liability waivers that clarity, specificity, and a genuine opportunity for assent are crucial for enforceability. It provides future plaintiffs a multi-pronged framework for challenging broad, confusing, and non-negotiable releases, particularly in non-commercial contexts where one party has significantly more power.
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