Voids agreements exempting parties, their agents, servants or employees, from liability for damages caused by their negligence, as against public policy

BILL NUMBER:A608A

Title of bill

An act to amend the general obligations law, in relation to voiding exemptions from liability

Purpose or general idea of bill

To provide that any contract provision which exempts a party from liability for negligence shall be deemed void and unenforceable except where state statute or federal or international law specifically provides otherwise. The unenforceability of such provision shall not affect the validity or enforceability of other provisions of the covenant, contract or agreement in which the unen- forceable provision is contained.

Summary of specific provisions

This bill amends the general obli- gations law by adding a new section 5-336 to provide that any provision contained in any covenant, agreement or understanding which exempts a party from liability from damages caused by or resulting from the negli- gence of a party shall be deemed to be void as against public policy and wholly unenforceable unless state statute or federal or international law specifically provides otherwise.

Justification

Exculpatory provisions in a contract, purporting to insulate one of the parties from liability resulting from that party's own negligence, although disfavored by the law and closely scrutinized by the courts, generally are enforced. In GROSS V SWEET, (49 NY2d 102) Numerous statutory provisions, however, have been adopted to prohibit exemptions from liability in certain contracts. For example, agreements exempting caterers (G.O.L. Section 5-322), maintenance contractors (G.O.L. Section 5-323), and gymnasiums (G.O.L. Section 5-326) from liability for negligence are void and unenforceable. Similarly, a contract which grants an exemption from liability for willful or grossly negligent acts is void. This legislation continues the trend against contracts that contain exculpatory clauses and provides that all such provisions are void unless state statute or federal or international law specifically provides otherwise.

In LAGO V. KROLLAGE, (78 NY2d 95), the Court of Appeals held that a mechanic did not get the benefit of 0,01. § 5326 because the defendant was not technically an owner of a place of amusement. Although § 5-326 was designed to protect individuals negligently injured at speedways and other places of public amusement, the LAGO decision highlights its limited effectiveness. Since the defendant did not meet the technical requirements of the statute, the plaintiff was barred from recovery because of a hold harmless provision in his contract. It is unfair and inconsistent to deem exculpatory contracts void and unenforceable in certain instances and not others.

Prior legislative history

2006-07 A.407- Passed Assembly 2005.06- A.1242- Passed Assembly 2003-04- A.4826- Passed Assembly 2001.02- A374- Passed Assembly 1999-2000- A.295- Passed Assembly

Fiscal implications

To be determined.

Effective date

This act shall take effect immediately and shall apply to contracts entered into on or after such effective date.