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Jordan v. Diamond Equipment & Supply Co.4/28/2005
487, 47 S.W.3d 889 (2001), we reiterated that "this court has long stated a strong disfavor for exculpatory contracts that exempt a party from liability, because of the public-policy concern encouraging the exercise of care." Id. at 493, 47 S.W.3d 893.
Furthermore, in deciding the validity of exculpatory clauses our court has required a thorough consideration of "the facts and circumstances surrounding the execution of the release." Finagin v. Arkansas Development Finance Authority, 335 Ark. 440, 455, 139 S.W.3d 797, 806 (2003). Under some limited circumstances, the court has been willing to enforce exculpatory clauses after a determination that the circumstances are such that the exculpatory clause does not discourage the use of ordinary care. In Finagin, the exculpatory clause was executed by a guarantor in favor of a lender. We observed that there was no evidence that the guarantors were unsophisticated businessmen, or that the agreements were entered into unfairly, and thus, enforcement of the exculpatory clause was allowed. Id. at 458, 139 S.W.3d 808. Moreover, the exculpatory clause only released the lender from liability for any "setoff, counterclaim, reduction, diminution of an obligation, or any defense of any kind or nature. . ." Id. at 455, 139 S.W.3d 806. Notably, this release was not a release from all liability, only liability arising in the form of a setoff, counterclaim or defense. Likewise, we upheld a limited waiver of liability in Edgin v. Entergy Operations, Inc., 331 Ark. 162, 961 S.W.2d 724 (1998), where we concluded that, because the waiver of liability was not a complete waiver of liability for work-related injuries and instead only a limited waiver of liability for additional remedies after workers' compensation, the agreement did not violate public policy by discouraging the employer or its clients from exercising reasonable care. Id. at 168, 961 S.W.2d 727.
Similarly, in the case of Miller v. Pro-Transportation, 78 Ark. App. 52, 77 S.W.3d 551 (2002), the Arkansas Court of Appeals upheld a clause releasing the trucking company from liability for negligence where the signor was the wife of the driver who sought to ride along with her husband. When the truck was involved in an accident, the wife sued the trucking company for damages she received as a result of the negligence of its employee (her husband) and argued that the exculpatory clause was invalid as against public policy. In analyzing the public policy question in connection with the release, the appellate court concluded that the circumstances of the case mitigated the public policy concerns:
Finally, we think that the public policy of encouraging careful behavior that underlies the disfavor for such exculpatory clauses has little application in the present case, where the allegedly negligent party, appellant's husband, was the driver of the vehicle and, therefore had far more compelling reasons to drive carefully than the avoidance of possible tort liability.
Id. at 55, 77 S.W.3d 554. In its analysis, the Miller court additionally examined the circumstances surrounding the lease, including that the appellant had previously ridden with her husband and knew the dangers involved in the trucking operation, and that the parties knew that injury could result from these activities, and as a result, the company required additional passenger insurance to cover the appellant's injuries.
This court reviewed similar factors in upholding the exculpatory clause in the case of Plant v. Wilbur, supra. In Plant, the appellant, Robert Plant, was injured by flying debris while watching an auto race from the pit area of the track. Before entering the pit, Plant signed an exculpatory agreement
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