Releasing Liability: What You Should Know Before Your Business Uses a Release of Liability

Some activities are inherently risky. Visitors of certain types of businesses, such as shooting ranges, equestrian centers, and sky diving know there is a chance they could get injured when they engage in the activities those businesses offer. To protect themselves against potentially costly lawsuits, businesses can use a liability waiver to shift the risk from themselves to their customers.

Liability waivers are a type of contractual provision in which one party agrees not to hold the other party legally responsible for a set of acknowledged risks. Businesses may ask customers to sign a liability waiver saying that they will not sue for damages if they are injured on the business owner’s premises.
Courts have generally found liability waivers to be enforceable, but they are not a silver bullet. If you ask your customers to sign away their right to sue, you must draft a liability waiver that will stand up to scrutiny if tested.

When Is a Liability Waiver Appropriate?

Liability waivers are most commonly used by businesses that offer dangerous activities. “Dangerous” does not have to mean an extreme activity like skydiving, CrossFit, or martial arts, however.

● Most people would not consider getting a massage to be dangerous, but a massage therapist might ask patients to sign a liability waiver in case they aggravate a prior injury when providing treatment.
● Liability waivers may be used if just one part of an activity—or one part of a property—presents risks. A sightseeing tour offered by a tourism company might not be considered very dangerous, but traveling by car or bus to the tour destination carries a risk of injury, so the tourism company might ask guests to sign a liability waiver. Similarly, a homeowners’ association might have a liability waiver pertaining to their recreational facilities, such as pools and workout centers.
● Businesses may require contractors to sign a waiver prior to working on their property.
● Liability waivers can be used in unusual or one-off circumstances that present a risk of injury or illness; for example, during the COVID-19 pandemic, businesses introduced liability waivers in an attempt to preclude lawsuits from people who became ill from contracting the virus at the business’s site.

There is no definitive list of circumstances in which businesses should or should not use a liability waiver.

For practical reasons, not all businesses ask customers to sign liability waivers. Grocery store patrons, for example, could slip and fall on a wet spot and sue the store for their injuries, but they are not asked to sign waivers before shopping. The risk of a slip-and-fall accident is low, and it would require a lot of time and resources to get every shopper to sign a release. It is more practical for grocery stores to clean up spills and use “wet floor” signs when appropriate to mitigate their liability.

On the other hand, if the grocery store has a play area for children to use while their parents shop, the store might ask parents to sign a waiver releasing the store from liability for injuries suffered while using the play area.

Liability waivers are typically not used in an employment context to protect the business against claims arising from work-related injuries. This is because employees cannot sue their employers for injuries, except in very rare cases. Instead, they are compensated by the business’s workers’ compensation insurance. An employer could ask an employee to sign a release that is not related to injury claims, however, such as a release barring legal claims over separation or termination of employment.

Are Liability Waivers Legally Enforceable?

The enforceability of liability waivers is generally a state law matter, and states vary widely in their stance towards these provisions. Some states, including Louisiana and Virginia, consider waivers of liability for physical injury to be unenforceable. Other states have a freedom-of-contract stance and allow liability waivers if they meet a few basic requirements.

To be legally enforceable in states where they may be used, a waiver should meet the following criteria:
● The waiver must be clear and unambiguous. This means that the waiver must clearly specify the types of activities and legal claims it applies to. The waiver should not be overly broad to avoid confusion about its terms. It should also avoid legalese in favor of terms easily understandable by the average person. The customer should be able to understand what they are signing and that they are waiving their rights.
● The waiver should be conspicuous. This means that the liability waiver should be a separate document and should not be buried within a registration form or document that also addresses other matters.
● The waiver should not include intentional, reckless, or grossly negligent conduct. Waivers are designed to provide a liability shield against ordinary negligence (i.e., unintentional conduct or oversight). They are not a get-out-of-jail-free card for companies to engage in wanton irresponsibility. So, while a waiver might protect a company offering hazardous activities against an accidental injury, if the company offers those activities without providing any safety equipment or procedures, a waiver likely would not protect them against claims arising from customers’ injuries that could have been avoided by taking those reasonable precautions.
● The waiver cannot violate state laws or public policy. Not only must liability waivers comply with the law in the state where they are drafted, they also must not violate public policy. For example, a waiver may be determined to be against public policy if one party has substantially less bargaining power, so that the contract puts them at the mercy of the other party’s negligence.
● The waiver should comply with basic contract law principles. Each state has developed a body of case law applicable to liability waivers. In addition to these state-specific rules, basic contract law principles apply to waivers. The business seeking to enforce the waiver must obtain a signature from a customer who has the capacity to enter into the contract and provide sufficient consideration (i.e., something of value). Note that many states will not enforce a liability release signed by a parent on behalf of their minor children, who lack contractual capacity.

In summary, a liability waiver should be as detailed and as clear as possible. It should describe the activity the customer will engage in and its location, list the possible risks and injuries that could arise from that activity, and release the business from negligence to the full extent of the law, without creating a blanket shield against grossly negligent conduct. The names and addresses of the parties must be included, and the waiver must be presented to each individual customer for their signature, as a release that purports to waive liability on behalf of a group is not likely to be enforceable. Above all, have an attorney review the waiver of liability to ensure it complies with applicable state laws and will pass muster if tested in court.

Are You Doing Everything Possible to Protect Your Business?

The decision to have customers sign a liability waiver is usually industry-dependent; but new risks are constantly emerging, and companies must always be prepared to update their mitigation strategy.

Although a liability waiver is not a guarantee against all liability, when well-written, it can be an important part of a company’s risk management strategy. One-size-fits-all online documents that are not tailored to your unique business activities and jurisdiction’s laws could fail a court challenge. For help creating a customized liability waiver designed specifically for your business, contact our office to schedule an appointment.

Legal Considerations for Farm Owners

Farming brings to mind kinship with nature and a simpler way of life. But the farming industry is highly regulated, and navigating the applicable laws and regulations can be far from simple. A rising world population creates greater demand for food and the farmers who produce it. With the age of the average farmer hovering around sixty years old, younger farmers and ranchers are also needed. Those who want to break into the farming business may do so to carry on a family tradition or start a new tradition as a farmer. But before a single seed is planted or an animal is raised, farmers should familiarize themselves with the legal landscape that impacts their operations.
Is My Farm a Hobby or a Business?
Perhaps you started a backyard garden to supplement store-bought produce and discovered that you have a green thumb. You quickly accumulated more food than you and your family needed, and you gave away the excess to friends and neighbors. So far, your garden is still strictly in the realm of a hobby. But let’s say that, instead of giving the food away, you set up a booth at a local farmer’s market and sell it. You expand your garden to generate more food, and you begin to earn income—albeit supplementary to your primary income—from the food sales. At this point, you may have gone from gardening for fun to farming as a business in the eyes of the Internal Revenue Service (IRS). The IRS has strict rules about what is considered a business and what is considered a hobby. According to IRS Publication 225, you are in the farming business if you “cultivate, operate, or manage a farm for profit, either as owner or tenant.” See footnote 1.
As a for-profit farmer, you must pay taxes on any income you generate from farming. However, being a farmer also comes with tax benefits, such as special income tax deductions. Tax considerations may have a major effect on the timing of farm income and deductions and, as a result, they can be a significant factor in determining the structure of certain farm transactions (i.e., acquiring new equipment). Farmers should be aware of taxes and tax laws to avoid mistakes that reduce their after-tax income, says the Land Grant University Tax Education Foundation. See footnote 2.
Choosing a Farm Business Structure. 
If your farm is a for-profit business, the type of business structure you choose for your farm has legal and tax implications and should be chosen carefully based on your situation. For example, sole proprietor farmers do not have to register their business with the state or file any paperwork to set up their business the way that businesses formed as separate legal entities do. But if sole proprietor farmers are sued or owe debts to creditors, their personal assets may be at risk. As a farmer, you can choose any type of business form for your farm, including the following:
●Sole proprietorship
●Limited liability company (LLC)
●Corporation (including S corporation and C corporation)
●Nonprofit corporation
The Small Business Administration gives a brief overview of these different business structures.  See footnote 3.  The website Beginning Farmers recommends that new farmers consult with an attorney and a certified public accountant that understand the farming laws where the farm is located. See footnote 4.
Federal Farming Laws.
The US Department of Agriculture (USDA) regulates farming and ranching, as well as food quality, safety, and nutrition labeling. It consists of twenty-nine agencies that oversee everything from food safety and inspection, to crop and livestock insurance regulations, to the national biotechnology regulatory framework. Many of these farming regulations are set forth in the farm bill—a legislative package that Congress passes about once every five years. The farm bill is the primary way that the government sets agricultural and food policy. It has a huge impact on how food is grown, the types of food produced, and farmers’ livelihoods. Once a farm bill is passed, the USDA writes the rules for how its programs will be implemented. The 2018 Farm Bill, which expires in 2023 and provided $428 billion in funding, covers the following topics:
●Price and income support for farmers
●Natural resource conservation
●Federal loan programs for farmers
●Farm and food research and education
●Rural farm development
Farm bill assistance is provided to farmers through a variety of programs.  See footnote 5.
For example, you may qualify for financial assistance if you are a veteran, minority, or woman farmer or rancher. The USDA is not the only federal department that oversees agricultural practices. The Environmental Protection Agency (EPA) also has several programs that are relevant to farmers.  See footnote 6.  Some of these programs only apply to farm operations of a particular size or in a specific location.
The regulatory burdens imposed on farms vary, but may involve application, permitting, planning, labeling, testing, waste management, and other requirements. The EPA has the authority to impose civil and criminal penalties on noncompliant farmers. Violations of the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA), for instance, which relates to pesticide application, can result in fines up to $50,000 and a year of imprisonment.
State Farming Laws

The EPA notes that many states’ requirements may be broader in scope or more stringent than those of the EPA. Because state laws vary considerably, farmers must remain up to speed on state agricultural statutes, which deal with much more than environmental issues. The National Agricultural Law Center notes that these laws touch on a wide range of farming topics.  See footnote 7:

  • Agricultural liens
  • Biofuels
  • Climate change
  • Fence law
  • Grain sales and storage
  • Noxious weeds
  • Ownership of agricultural lands
  • Recreational use
  • Tax assessment of agricultural land
  • Unmanned aerial vehicles (i.e., drones)

To place just one of these issues under the spotlight, more than forty states—in addition to the federal government—have statutes addressing climate change in agricultural production.

Legal Support for Farmers.

For most farmers, the hard work is more than made up for by the reward of knowing they are helping to feed the world. But the demands of farming go beyond the long hours and physical toil: understanding the many federal and local farming laws presents a very different type of challenge. You might need a hand not only at harvest time, but any time you have legal questions about farming. Our attorneys are knowledgeable about the laws that affect farmers. Whether you are just starting your farm or are a long-time farmer wanting to expand or change your operation, we are here to help. Please contact us to schedule an appointment.

1About Publication 225, Farmer’s Tax Guide, Internal Revenue Serv.,
2Tax Guide for Owners and Operations of Small And Medium Size Farms, Land Grant Univ. Tax Educ. Found., Inc. (Philip E. Harris & Linda E. Curry eds., 2011),
3Choose a business structure, U.S. Small Bus. Admin.,
4Farm Incorporation, Beginning Farmers,
5Farmers’Guide to Farm Bill Programs, U.S. Dep’t of Agric. (July 2019),×17.pdf.
6Laws and Regulations that Apply to Your Agricultural Operation by Farm Activity, U.S. Env’t Prot. Agency,
7State Law Clearinghouse, The Nat’l Agric.Law Ctr.,

Why You Should Consider Putting Your LLC into a Trust

The limited liability company (LLC) is a popular business structure that offers liability protection and avoidance of double taxation. Trusts are popular asset transfer vehicles that allow you to avoid probate and keep assets out of the hands of creditors. By placing LLC membership interests in a trust, business owners can combine the two types of legal entities and enjoy the best of both worlds.

Transferring an LLC to a trust requires a bit of paperwork, and in multimember LLCs, may also require the consent of other members. But a well-planned transfer can help reduce risks, keep your business affairs out of government hands, and fit into your broader estate planning goals.

Benefits of Placing LLC Interests in a Trust

Whether you own a single-member LLC or are co-owner of a multimember LLC, your LLC ownership interests are considered personal property. Indeed, your business interests are probably one of your most valuable assets. As such, you will want to ensure that you are safeguarding your LLC now and have a plan for what will happen to the business when you are not around or can no longer manage your affairs.

The following are some of the key benefits of placing LLC interests in a trust:

  • Probate avoidance. Probate is the legal process of settling an estate when somebody passes away. Overseen by the court (e., the government), probate ensures that your debts are paid off and your assets—including business interests—are allocated to the beneficiaries you specify in your will. Assets that are placed in a trust generally avoid probate, which can take weeks or months to complete. During the probate process, there may be nobody managing your business interests, which can result in operational problems.
  • Privacy. Not only can probate be lengthy and cause your business to languish—a probated estate is a matter of public record. That means anyone who knows where to look (e.g., creditors, disinherited heirs, and scammers) can learn details about your estate. Trusts, on the other hand, bypass probate, and the assets they contain pass to your beneficiaries more quickly, efficiently, and privately.
  • Incapacity planning. You may have a plan for what will happen to your business when you die, such as having a trusted family member take over, or an agreement that allows other LLC members to buy out your ownership stake upon your death. But what happens if an accident or illness renders you incapable of fulfilling your business duties? If your LLC interests are held in a trust, the trust can be structured so that your incapacity immediately triggers the authorization of another person (i.e., the trustee) to take over on your behalf.
  • Asset protection. Depending on the type of trust in which you place your LLC membership interests, the trust can make it more difficult for creditors to go after the trust assets.

Types of Trusts You Can Use for an LLC

The three main types of trusts that are commonly used with LLC asset transfers are revocable trusts, irrevocable trusts, and asset protection trusts. Each type has pros and cons for holding LLC assets.

  • Revocable trusts (also known as living trusts) are trusts that can be changed or canceled during the lifetime of the grantor (the person who establishes the trust). The grantor can name themselves as the trust beneficiary (the person who receives a benefit from the trust) as well as the trust’s trustee (the person who has the right to manage trust assets, including any business interests). Using a revocable trust allows you to avoid probate, control the LLC, and receive income from the trust as the beneficiary during your lifetime. The trust can be set up in such a way that, upon your death or incapacity, a new trustee and a new beneficiary (or beneficiaries) are named. However, as long as you are still alive and maintain control over the trust, the trust assets could be subject to creditors’ claims.
  • Irrevocable trusts, unlike revocable trusts, cannot be changed or canceled after they are created (note that good attorneys will always include some loopholes to deal with irrevocable trusts that need to be modified or revoked). The advantage of an irrevocable trust is that creditors cannot go after the assets of the trust’s grantor. However, if an LLC is held in an irrevocable trust, the grantor can also lose access and control over the LLC, as somebody other than the grantor will often be named as trustee and beneficiary.
  • Asset Protection Trusts (also called self-settled trusts) allow LLC owners to enjoy both the ownership and control benefits of a revocable trust and the asset protection benefits of an irrevocable trust. These types of trusts are highly specialized and quite complicated from a legal standpoint. Although they are required to be irrevocable, they can also allow you to receive distributions from the trust as the beneficiary and specify who will receive your LLC membership interests when you die. Not all states allow domestic asset protection trusts, but you do not have to be a resident to establish a trust in a specific state. Foreign, or offshore, asset protection trusts are another possibility.

Other Considerations for Placing Your LLC in a Trust

Placing your LLC interests in a trust means that the trust—not you as the business owner—is legally an LLC member and a party to the LLC’s operating agreement. Although the law permits a trust to own an LLC, the LLC operating agreement may not. Therefore, you will first need to check whether the operating agreement allows for this arrangement.

Even if the LLC operating agreement permits trusts to be members, you may still need to obtain consent from the other members (assuming it is a multimember LLC). Obtaining their consent could require a unanimous or majority vote, depending on the rules in the operating agreement.

If you can proceed with the transfer of your LLC into a trust and have it become an LLC member, you will need to take the following steps:

  • Transfer the LLC into the trust with the appropriate documentation prepared by an attorney
  • Update LLC documents, including the operating agreement, buy-sell agreements, and the articles of organization, to reflect the fact that the trust (not an individual) is now a member
  • Have the LLC members sign a resolution that formally recognizes the change of LLC ownership from an individual to a trust. This is not required, but it is a good business practice that can underscore the validity of the transfer of your LLC interests.

The advantages of having a trust-owned LLC should be weighed against the disadvantages—including any unforeseen consequences that can only be uncovered through a careful evaluation of the LLC’s operating agreement, buy-sell agreements, and transfer restrictions. Our attorneys can help you decide if transferring an LLC interest to a trust is the right move for your situation. If you choose to proceed, we can also help you select a trust structure and document the transfer. For assistance with these and other business law matters, please contact our office and schedule an appointment.