It's the Law: Building? Understand the contractor’s agreement first

Q: I am ready to sign a contract with a builder. He has a clause in his contract that states he is not liable for any damage or injuries to me or anyone on the property with my permission, including but not limited to negligence, gross negligence, strict liability or intentional conduct by the builder or the builder’s officers, directors, owners, employees and successors, representatives and assigns. Is that enforceable?

A: The contract provision you reference is known as an exculpatory clause. It is an effort by one of the contracting parties to avoid liability. In some cases, the clause goes on to require more than mere release from liability. Some also require one party pay the other’s expenses, including attorney fees, resulting from claims.

These provisions are strictly construed, which means courts look for a way to avoid them. If the language does not clearly encompass avoidance of liability for the claimed wrongdoing, it will not be enforced.

The scope of these clauses has expanded to the point where some attempt a complete release from all liability, including negligence and intentional action. If successful, the clause is cheap insurance.

Florida courts have agreed that a party can obtain release for its own negligence, as long as the release is clear and unequivocal and the parties are of relatively equal bargaining power. These clauses are commonplace in recreation contracts, such as parasail rides, athletic leagues and sporting events. These clauses are generally not enforceable where they are written to include intentional wrongdoing or violation of a statutory duty.

Florida courts have held landlords cannot exempt themselves from responsibility for negligence if the exemption would protect the landlord from liability arising from breach of a statutory duty intended to protect tenants, tenants’ property or the public generally. These duties have included fire code, requirements for structural maintenance and, in some cases, even security of premises.

Other businesses have been luckier. In one case a customer sued the bank for losing the customer’s valuables in a safe deposit box. The customer’s suit claimed the bank allowed his wife unauthorized access. The court allowed the bank to defend on a ground that its safe deposit box contract limited its liability to gross negligence, fraud or bad faith. The courts specifically notes that it was not alleged the clause violated any ordinance or statute, the language of the agreement was clear and unequivocal and the provision did not completely exculpate the bank from any liability.

In other cases, exculpatory clauses have been unavailing because they were limited to insulating a party from liability for his own negligence. Where the party was otherwise in breach of contract, the exculpatory clause does not insulate that party from liability for the breach.

The recent case of Loewe versus Seagate Homes involves facts very similar to your situation. In that case, the Loewes contracted with Seagate to build a home. Less than a week after the Loewes moved into the home, door fell off its track and struck Mrs. Loewe in the eye, causing serious and permanent injuries. The Loewes sued the builder for negligence.

The builder relied on an exculpatory clause in the contract. The court summarized the clause by indicating it attempted to release the builder from liability caused by its construction practices, regardless of whether the injury resulted from the builder’s negligence, gross negligence, or intentional conduct.

The court noted that to the extent the clause attempted to release the builder from liability for an intentional tort, it was unenforceable. It was also unenforceable to the extent it tried to contract away responsibility to comply with a building code. The court held that regardless of whether the Loewes could establish a code violation, the exculpatory clause was unenforceable in that case.

The court explained that Florida’s comprehensive regulation and licensing of building contractors and construction standards reflects a clear public policy to protect purchasers of residential homes from personal injuries caused by improper construction. The court held the public policy of Florida prohibited builders of residential homes from absolving themselves from liability for personal injury caused by their negligent acts, as it would undermine the legislature’s intent.

The facts of your case are similar to the facts in Loewe versus Seagate Homes. The Loewe decision appears to be the only appellate decision on this point in Florida. Other courts may disagree minor differences in facts can also lead to different results. I suggest you retain an experienced attorney before proceeding further.

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William G. Morris is a lawyer with offices at 247 N. Collier Blvd., Marco Island. The column is not intended to be legal advice for specific circumstances. General questions can be sent by e-mail to wgmorrislaw@embarqmail.com or by fax to (239) 642-0722. Read other columns at http://www.wgmorris.com.

© 2008 marconews.com. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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