Updated on 5/20/2020
Can I Protect My Business With Waivers Or Arbitration Agreements?
Business relies upon planning, and planning requires certainty. This isn’t just a maxim thrown around lightly, for most industries and most business owners it is absolutely true. Running a business requires planning far into the future, making unexpected obstacles and profound uncertainty crippling to the profits, growth, and flexibility of any enterprise. Unfortunately, a lawsuit can have a huge impact on a business and is often extremely difficult to anticipate. Increasingly, business owners from Las Vegas, Henderson, Reno, and across Nevada have sought to address this problem through liability waivers and arbitration agreements. But is this an effective strategy?
When Does A Waiver Protect You & Which Risks Can Be Waived?
Limiting the liability of a business through a waiver requires careful consideration of two separate factors. First, the waiver must be obtained using the correct procedures. What does this mean in practice? It requires that (1) the waiver you have your customer is “plain and clear” as to the rights they are waiving; (2) the customer understands what they are agreeing to; and (3) the waiver is within the customer’s “reasonable expectations”. There is important nuance to each of these, but essentially, they boil down to the requirement that your customer fully understand and agree to the waiver.
Second, a waiver may only cover regular negligence. It cannot remove liability for either intentional acts or gross negligence. In the simplest possible terms, this means that the waiver only covers a normal accident. It cannot cover something done intentionally by an employee that results in injury, and it cannot cover gross negligence (which is failure to exercise even the slightest care). The difference between regular and gross negligence can be difficult to discern, but ultimately comes down to whether the negligent action showed a total lack of regard for lives and safety of others.
As an illustration of the difference, consider the following. It would be negligent to drive 120 miles per hour on the freeway. It would be grossly negligent to drive 120 miles per hour in a school zone. It may be dangerous to drive that speed on the freeway, but to drive that speed in a school zone would demonstrate a complete lack of care for human life. Neither driver intends to hurt anyone, but one is ignoring an overwhelming risk.
Will Arbitration Save My Business Money?
Alternatively, instead of seeking to have customers sign a waiver of liability, some business owners rely upon binding arbitration agreements. An arbitration agreement does not prevent the business from being liable for a customer’s damages, but can greatly reduce the time and expense a business incurs compared to dealing with a traditional lawsuit. Under an arbitration agreement, the dispute would be settled over a short time period by a previously selected neutral arbitrator. This usually precludes the award of a huge sum of money through a jury trial, and therefore, minimizes potential business disruption.
There are a number of technicalities that must be considered to ensure that an arbitration agreement is binding. Perhaps the most important of these is the requirement (established by NRS 597.995 and clarified by the Nevada Supreme Court in the 2016 case Fat Hat, LLC v. Diterlizzi) is that the arbitration agreement must contain a “specific authorization” stating that the parties have “affirmatively agreed” that any dispute would be settled through arbitration.
The Right Business Attorneys For Nevada
Both liability waivers and arbitration agreements are powerful tools for protecting a business by limiting risk exposure and uncertainty. It’s no coincidence that both have become increasingly common throughout almost every industry. However, to truly unlock the powerful protections of these tools, it is essential that you consult with an attorney that can advise you on every potential implication and ensure that your waiver or arbitration agreement is crafted to stand up to the scrutiny of the courts. Make no mistake, simply having your customer initial a statement that they give up their right to sue you over anything that happens to them is not sufficient and will not protect you.
At Black & LoBello, we have attorneys that specialize in handling the complex contractual issues involved in implementing these solutions. We are problem solvers and will consider every possible legal risk to your business, then carefully craft the contractual provisions required to limit your liability to the utmost degree allowed by law. Additionally, we have recently created a flat fee general counsel program that is designed to assist small and medium size businesses with just this type of problem, while keeping legal fees at a bare minimum. If you have a business in Las Vegas, Reno, Henderson, or anywhere else in Nevada, don’t risk losing it all to a big lawsuit over a simple accident. Call us today at (702) 869-8801 or email us at Mlounsbury@blacklobello.law and let us protect you.
During this Stay Home 4 Nevada period, the Governor is encouraging other services, including but not limited to legal, business and management consulting, professional services and insurance services to have employees work remotely. Black & LoBello will remain “on-call” 24/7 to answer your emergency legal concerns at no charge. We know you are concerned but we are here for you.
Remember, this too shall pass. In the meantime, stay safe, stay healthy and be NEVADA STRONG!