Richards v. Richards
Supreme Court of Wisconsin, 1994.
181 Wis.2d 1007, 513 N.W.2d 118.

Facts:

Leo Richards got a job as a truck driver. His wife wanted to ride along, so she singed a “Passenger Authorization” form. The form had two purposes:

(1) It served as the company’s authorization.

(2) It released the company from all liability.

A few weeks later, during a trip, the Richards got into an accident and tried to sue.

History:

  • The trial court granted summary judgment for the defendant.
    • The contract was not void or unenforceable due to public policy.
  • The court of appeals affirmed.

Issue:

Was the agreement void as a matter of public policy?

Holding:

Yes. Case reversed.

Reasoning:

“Imposing liability on persons whose conduct creates an unreasonable risk of harm outweighs the policy of freedom to contract.”

The court then cited three factors:

(1) The contract’s purposes were not clearly defined or distinguished.

  • Signing a form titled “Passenger Authorization” would not put a person on notice that what they were really doing was releasing the company from all liability.

(2) The release is extremely broad and all-inclusive.

  • It wasn’t limited to a specified vehicle or to a specified time period.
  • The breadth of the release raises questions about its meaning and demonstrates its one-sidedness.
  • Prof: Courts can either throw out broad warranties, or narrow them down.

(3) The contract was a standardized agreement that offered little to no opportunity for negotiation or free and voluntary bargaining.

  • The fact that it was a standardized form does not, in itself, invalidate it, however, the plaintiff’s lack of opportunity to discuss it was significant based on the breadth of the release.

Public policy (pretty much same as above):

  • Injured people should be compensated!

Prof: A pre-injury promise releasing the promisee from tort liability for harm caused negligently is not automatically void as being contrary to public policy. Exculpatory clauses are not favored, however, and a court will therefore closely examine whether such a clause violates public policy and construes such a clause strictly against the party seeking to enforce it.