Law Lessons from Lake Estates Condominium Assoc., Inc. v. Falcon Engineering LLC, N.J. Super. Law Div. (Natali, P.J.Ch.), MIDDLESEX COUNTY, DOCKET NO. L-6171-15, August 31, 2017:
Because an exculpatory clause operates to relinquish one party from a legal right, while relieving the other party of owing a duty of reasonable care, “an exculpatory release agreement must, on its face, reflect the unequivocal expression of the party giving up his or her legal rights that this decision was made voluntarily, intelligently and with the full knowledge of its legal consequences.” Gershon, Adm’x Ad Prosequendum for Estate of Pietroluongo v. Regency Diving Center, Inc., 368 N.J. Super. 237, 247 (App. Div. 2004) (citations omitted). Generally, exculpatory clauses are disfavored and often receive close judicial scrutiny. Stelluti v. Casapenn Enters, LLC, 203 N.J. 286, 303 (2010). Examples of such contractual provisions include the following: “forfeitures, penalties, provisions limiting a party’s legal rights, and provisions that depend for their validity or enforceability on the subjective judgment of one of the parties.” Id. (citation omitted). New Jersey courts will enforce an exculpatory release if:
(1) it does not adversely affect the public interest;
(2) the exculpated party is not under a legal duty to perform;
(3) it does not involve a public utility or common carrier; or
(4) the contract does not grow out of unequal bargaining power or is otherwise unconscionable.
Gershon, Adm’x Ad Prosequendum for Estate of Pietroluongo v. Regency Diving Center, Inc., 368 N.J. Super. at 248 (citation omitted).
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