How businesses and consumers assess risk

Business, Money

Indoor rock climbing? Bounce house birthday party for kids? Part of the “fun” at recreational establishments involves signing a waiver pardoning the business from any liability should a broken bone, concussion, or other serious injury occur. Also known as “release forms” or “hold harmless agreements,” waivers generally say that the person signing the document is “assuming the risk” of being injured. The language of the waiver attempts to limit the liability of the business should a customer be injured on their premises or as a result of their services.

“Waivers are everywhere in our modern society,,” says Morris Lilienthal, attorney at Martinson & Beason in Huntsville, Alabama. “Waivers are an acknowledgement of a stated risk. When you sign a waiver, you are stating that you understand the contemplated risk. You still may sue, but the business you are suing has a strong defense.”

Risky business

Every business owner takes a calculated risk when they start a new enterprise. But not every business is inherently risky for consumers, or for the company providing a good or service. While it may seem like recreational activities assume the greatest risk, there are plenty of other businesses that dance with the danger of getting sued simply by existing.

Here are four risky businesses and how they typically handle the risk component:

  1. Trampoline parks/bounce houses

Whether they’re filled with trampolines alone or offer a mix of climbing walls, stunt bags, trapezes, dodgeball, and more, trampoline parks rank near the top of risky business. Children are the largest clientele for these establishments like, and the legalities surrounding services to children are solid, which can make limiting liability tricky for a recreational business.

Children under 18 cannot legally sign an agreement to waive their rights to sue if they are injured. Their parents can put a signature on a waiver, but parents do not legally have the right to waive these rights on behalf of their kids. This all boils down to the reality that children still have the inherent right to sue.

Want to try to get around the legal risk? Parents can be asked to sign an agreement to compensate a business should their child file a claim against the business. Few parents will want to pay the legal fees incurred by a business their child is suing, so having this paperwork in place could keep a business out of the courtroom.

  1. Online dating sites

Our culture is full of risk. Just look how many people use online dating. From catfishers to registered sex offenders, the list of undesirables who troll online dating platforms makes dabbling in this type of interaction extremely risky.

The terms of use on sites like not only employ wording saying the user has agreed to read the site’s online dating safety tips, the terms also include a waiver saying the site is not responsible for any of its members’ interactions. But let’s face it – consumers are not reading all that fine print in an online contract before they join a site or dating service. Thus, users who find themselves on the receiving end of inappropriate or unwanted attention often attempt to sue the dating site for invasion of privacy, misappropriation, and more.

However, dating sites not only have the waiver in the terms of use to fall back on, they also are protected by the Communications Decency Act of 1996. Section 230 of that act makes it clear that websites hosting user-generated content have immunity, and websites that qualify as an “interactive computer service” are not accountable for whatever its users do.

While lawsuits against and other online dating sites may regularly fail to find footing in a court of law, they have created public attention and a demand for more rigorous screening procedures, waiver or no waiver.

  1. Personal training

People hire personal trainers because they want to get in shape or become better at using exercise regimens and fitness machines at the gym. Adequate training and certification are a must for any personal trainer who wants to avoid basic liability, even if a client has signed an informed consent, release, and assumption of risk form. While such documents will weigh into any court decision if a lawsuit should come to pass, the trainer’s qualifications and an examination of the instructions the trainer provided for that specific client can trump any waiver.

Exercise in any form is a risk. If a client is injured on your watch, you could face a major hurdle if they sue. Thank goodness for liability insurance, right? Well, maybe. “If you can’t get insurance for a risk, or it only comes with large deductibles, non-standard policy forms, or [is offered only by] smaller insurance carriers with non-A ratings, then it’s a risky endeavor,” says Dana Gold, an insurance consultant who advises businesses regarding their property and casualty insurance through ARM Risk Management and Insurance Consulting Services in Atlantic Beach, New York. “That doesn’t mean you should not pursue it, but you should understand how insurance will respond. Waivers are great, but they generally do not hold up in court. Beware of insurance policy exclusions that can negate large exposures.”

  1. Resume writing

Anyone who’s ever applied for a job has had to deal with the angst of writing the ideal summary of their qualifications. Which is why companies like ResumeGo offer professional CV and resume writing services – but they must provide their services very carefully.

“While we do our very best to write the ideal resume for each of our clients, sometimes our customers are not able to secure a job offer at the companies they want to work at the most. This could be because their credentials are lacking, other candidates are stronger, the job position was already filled, or any number of other assorted reasons, many of which are beyond their control,” says ResumeGo co-founder Peter Yang.

“While this has only ever happened once or twice in our company’s history, occasionally a client will become upset at their lack of job prospects and direct that resentment toward us,” Yang adds. “To protect ourselves as a business, we include language in our terms of service that helps safeguard us from lawsuits initiated by those who are frustrated that they cannot get their dream job.”

Consumers: Beware the arbitration agreement

“A waiver does not ‘waive’ gross negligence or wantonness on the part of the business,” says Lilienthal. “If you sign a waiver on a bungee jump that was negligently attached, you still have a legal remedy for that negligence.”

He adds, however, that signing a binding arbitration agreement really can tie your hands.  “In contrast to a waiver, a binding arbitration agreement can severely limit your legal options. For this reason, consumers should be weary of signing arbitration agreements.” 

Just because a business requests that you sign a release or waiver does not automatically mean they are a bad idea. Every consumer measures risk in their own way. Perhaps you’ve had years of gymnastics training and feel confident that there is no way you could be hurt at a trampoline park given your expertise. And, if you did get injured, you would consider it your own fault.

“Businesses in risk-prone industries or businesses that expose consumers to risk should strongly consider implementing a waiver. It’s important to reiterate that while a waiver does not absolve your business of risk altogether, it can provide you with a defense,” says Lilienthal. But he adds, “While they offer a degree of protection from liability and litigation, they are by no means bulletproof…Under a premises liability action, a business or property owner can be held liable for injuries that were foreseeable.”