Will an Oregon court enforce a clause limiting or excluding a party's liability for its own negligence?
Only if the contract clearly says so, and a release can still be unenforceable. A presumption is indulged against an intention to contract for immunity from the consequences of one's own negligence, and a contract will not be construed to provide that immunity unless the intention is clearly and unequivocally expressed; generic text purporting to waive all liability or any loss will typically be insufficiently specific, and to overcome the presumption the contract must make explicit that the liability being waived is outside liability arising under contract, though no magic words are per se required; the court held that both the trial court and the Court of Appeals had erred in finding a waiver of tort liability in that contract (Certain Underwriters v. TNA NA Manufacturing, 2024). A clause limiting an engineering firm's liability for a house inspection report to the contract sum did not limit liability for negligence where the contract damages were nominal compared with the damages that might foreseeably result from negligence; the court declined to require the word 'negligence' but found the clause did not clearly and unequivocally express that intent, for two reasons it gave: 'liability' standing alone is less encompassing than a broad disclaimer and the buyer might reasonably have read it as reaching only liability arising from breach of contract, from a reasonable failure to discover latent defects or from property damage caused by the review itself; and a 'high-risk, low-cost' characterisation did not persuade the court that a lay consumer should bear the risk of a licensed professional engineer's negligence (Estey v. MacKenzie Engineering). In Bagley v. Mt. Bachelor the court concluded that enforcement of a ski area's anticipatory release at issue would be unconscionable because the factors favoring enforcement were outweighed, which meant the release was unenforceable, summary judgment for the operator was error, and the case went back for trial.
The trap
Generic text that purports to waive all liability, or any loss, will typically be insufficiently specific to reach a negligence claim (TNA). A limitation to the contract price can be treated like an exculpatory clause when that price is nominal compared with foreseeable negligence damages (Estey).
10 authorities
The words that state the rule
We conclude that both the trial court and the Court of Appeals erred. Oregon law establishes that “a presump- tion will be indulged against an intention to contract for immunity from the consequence of one’s own negligence.” Waterway Terminals v. P.S. Lord, 242 Or 1, 19, 406 P2d 556 (1965). In considering whether that presumption has been overcome, “a contract will not be construed to provide immu- nity from the consequences of a party’s own negligence unless that intention is clearly and unequivocally expressed.”
The words that state the rule
Generic text that purports to waive all liability, or any loss, will typically be insufficiently specific to overcome the presumption against the waiver of tort liability.
The words that state the rule
We adhere to our statement in Estey that no magic words are, per se, required. However, to overcome the strong presumption against waiver of tort liability, the contract must make explicit that the liability being waived is out- side of liability arising under contract.
The words that state the rule
The dis-positive issue is whether a clause in the parties’ contract limiting defendants’ liability “to the Contract Sum” applies to plaintiffs negligence claim. We hold that the clause does not limit defendants’ liability for negligence.
The words that state the rule
We decline to hold that the word “negligence” must expressly appear in order for an exculpatory or limitation of liability clause to be effective against a negligence claim.
The words that state the rule
However, in view of the actual language of the limitation of liability clause in this case, as well as the circumstances of the parties’ contractual relationship, we are unable to conclude that the clause clearly and unequivocally expresses an intent to limit defendants’ liability for the consequences of their own negligence to the contract sum.
The words that state the rule
Because the factors favoring enforcement of the release are outweighed by the countervailing considerations that we have identified, we conclude that enforcement of the release at issue in this case would be unconscionable.21 And, because the release is unenforceable, genuine issues of fact exist that preclude summary judgment in defendant’s favor. It follows that the trial court erred in granting defendant’s motion for summary judgment and in denying plaintiff’s cross-motion for partial summary judgment, and that the Court of Appeals erred in affirming the judgment dismiss- ing plaintiff’s action. The decision of the Court of Appeals is reversed. The judgment of the trial court is reversed and the case is remanded to that court for further proceedings.
The words that state the rule
Defendants argue that we should not apply the principles expressed in Layman and similar cases, because the clauses in those cases purported to completely exculpate a party from the consequences of its own negligence, whereas *378 the clause at issue in this case merely limits defendants’ liability to the contract sum. However, because the specified contract damages at issue here are nominal in comparison with the damages that might foreseeably result from defendants’ negligence, such a distinction would be illusory.
The words that state the rule
First, the word “liability,” standing alone, is less encompassing than the broad disclaimer found in Layman , which was held not to apply against a negligence claim. In this case, plaintiff reasonably might have interpreted “liability” to refer only to *379 liability arising from breach of contract, or from a reasonable failure to discover latent defects, or from property damage resulting from the review itself. Given the reasonable possibility of such limited interpretations, we cannot conclude that the parties “clearly and unequivocally” intended a broader interpretation that would have required plaintiff to bear the risk of defendants’ negligence.
The words that state the rule
Defendants’ attempt to characterize the contract as a “high-risk, low-cost” transaction does not persuade us that plaintiff, a lay consumer, should bear the risk of the alleged negligence of a licensed professional engineer. We conclude that the limitation of liability clause contained in the parties’ contract does not bar plaintiff’s negligence claim.
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