Will a Minnesota court enforce this clause limiting or excluding our liability for our own negligence?
It can. Minnesota has held, considering exculpatory clauses contained in construction contracts and commercial leases, that parties to a contract may, without violation of public policy, protect themselves against liability resulting from their own negligence (Schlobohm). But such clauses are not favoured: a clause exonerating a party from liability will be strictly construed against the benefited party, and it will not be enforced if it is either ambiguous in scope or purports to release the benefited party from liability for intentional, wilful or wanton acts (Schlobohm; Yang lists 'contravenes public policy' as a third disqualifier in the same sentence, citing Schlobohm). On public policy Minnesota applies a two-prong test, examining both prongs before enforcing: (1) whether there was a disparity of bargaining power between the parties, in terms of a compulsion to sign a contract containing an unacceptable provision and the lack of ability to negotiate its elimination, and (2) the types of services being offered or provided, taking into consideration whether it is a public or essential service.
The trap
The second prong is the one that voids clauses, and it is about WHAT you sell, not how you drafted. In Schlobohm a health-spa release survived (the Court held the clause 'was not void as against public policy') because no Minnesota statute regulated health clubs and the business was not of a type generally thought suitable for public regulation; in Yang the clause failed because 'the dispositive factor in determining the enforceability of the exculpatory clause here is the type of service that Voyagaire offers' and the houseboat renter met the statutory definitions of a resort and an innkeeper, which made it a public service that could not contract away its duty to protect guests. The adhesion argument is harder than it looks: a printed form offered on a take-it-or-leave-it basis is not enough by itself. There must be a showing that the parties were greatly disparate in bargaining power, that there was no opportunity for negotiation, and that the services could not be obtained elsewhere. What this rule does not establish: any Minnesota rule about a monetary CAP as opposed to an exculpation, and any rule about excluding consequential damages in a sale of goods.
11 authorities
The words that state the rule
When considering exculpatory clauses contained in construction contracts and commercial leases, we have held that parties to a contract may, without violation of public policy, protect themselves against liability *923 resulting from their own negligence.
The words that state the rule
Even though we have recognized the validity of exculpatory clauses in certain circumstances, they are not favored in the law. A clause exonerating a party from liability will be strictly construed against the benefited party. If the clause is either ambiguous in scope or purports to release the benefited party from liability for intentional, willful or wanton acts, it will not be enforced.
The words that state the rule
An examination of the cases demonstrates the emergence of a two-prong test used by the courts in analyzing the policy considerations. Before enforcing an exculpatory clause, both prongs of the test are examined, to-wit: (1) whether there was a disparity of bargaining power between the parties (in terms of a compulsion to sign a contract containing an unacceptable provision and the lack of ability to negotiate elimination of the unacceptable provision) North Star Center, Inc. v. Sibley Bowl, Inc., 295 Minn. 424, 426 , 205 N.W.2d 331, 333 (1973) (per curiam), [5] and (2) the types of services being offered or provided (taking into consideration whether it is a public or essential service).
The words that state the rule
Even though a contract is on a printed form and offered on a "take it or leave it" basis, those facts alone do not cause it to be an adhesion contract. There must be a showing that the parties were greatly disparate in bargaining power, that there was no opportunity for negotiation *925 and that the services could not be obtained elsewhere.
The words that state the rule
An exculpatory clause is unenforceable if it is ambiguous in scope, purports to release the benefited party from liability for intentional, willful or wanton acts; or contravenes public policy.
The words that state the rule
In determining whether an exculpatory clause violates public policy, we consider (1) whether there was a disparity in bargaining power between the parties and (2) the types of services being offered or provided, taking into consideration whether they are public or essential services.
The words that state the rule
In examining whether the type of service being offered is a public or essential service, the courts consider whether it is the type generally thought suitable for public regulation. Types of services thought to be subject to public regulation have included common carriers, [11] hospitals and doctors, [12] public utilities, [13] innkeepers, [14] public warehousemen, employers [15] and services involving extra-hazardous activities. [16] In Minnesota there is no statute regulating health clubs, gymnasiums or spas. The business of Spa Petite is not the type generally thought suitable for public regulation.
The words that state the rule
Consequently, we conclude that the services offered by Voya-gaire — including the rental of houseboats — qualify Voyagaire as a “resort” subject to regulation under Chapter 157 of Minnesota Statutes. As a resort offering sleeping accommodations to the public in its lodge rooms as well as on its houseboats, Voyagaire meets the statutory definition of an “innkeeper” in Minn.Stat. § 327.70, subds. 3-4. Therefore, it is appropriate to treat Voyagaire as an innkeeper providing a public service in determining the enforceability of the exculpatory clause in the houseboat rental agreement.
The words that state the rule
We conclude that as a matter of public policy, Voyagaire cannot circumvent its duty to protect its guests by requiring the guests to sign a rental agreement containing an exculpatory clause that purports to release Voyagaire from liability for the resort’s negligence. See 2 J.D. Lee & Barry A. Lindahl, Modern Tort Laiv: Liability & Litigation § 22:10 (2d ed.2002) (noting that “[a]t common law, a hotel or innkeeper could not contract away liability for negligence” because “[t]he innkeeper was bound by a public or quasi-public duty”). Therefore, we conclude that the exculpatory clause in the houseboat rental agreement is contrary to public policy and is not enforceable.
The words that state the rule
Accordingly, we reverse and hold that the exculpatory clause in Spa Petite's membership contract was unambiguous and limited to exoneration from negligence; that there was not disparity of bargaining power; and that the clause was not void as against public policy.
The words that state the rule
We conclude that the dispositive factor in determining the enforceability of the exculpatory clause here is the type of service that Voyagaire offers.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.