Contracts: Can your protect yourself from your own negligence?

Under Missouri law, the answer is yes. How you do it depends on your level of sophistication.

In general, when entering into a contract, to effectively release yourself from or limit your liability for ¬†your own negligence, you must include language in the contract that is “clear, unequivocal, conspicuous and include the word ‘negligence’ or its equivalent,” according to a recent opinion from the Eastern District Missouri Court of Appeals. The court notes, however, that less precise language may still be effective if the contract is between equally sophisticated commercial entities. A contract between sophisticated business entities may limit liability for negligence without specifically mentioning the term “negligence.”

For instance, the Missouri Supreme Court has held that the phrase “any and all claims” in an indemnity provision was sufficient to require one party to a contract to indemnify the other party for all claims, including negligence. See Utility Service and Maintenance, Inc. V. Noranda Aluminum, Inc., 163 S.W.3d 910 (Mo. band 2005). Presumably, if the contract was between unsophisticated parties, the phrase “any and all claims” would not include a party’s own negligence.

In addition, when determining whether a party to a contract is sophisticated, the court will look at whether the party is sophisticated in the type of transaction at issue. Whether a party is sophisticated in the transaction at issue will be a factually driven decision on a case-by-case basis. Under this analysis, even a large, multi-national corporation presumably could be found to be unsophisticated if it is new to or inexperienced in the transaction at issue in the case.

In conclusion, Missouri law will allow a party to contractually protect itself from its own negligence. The more sophisticated the parties to the contract are in the type of transaction at issue, the less precise the contractual language needs to be in order to effectuate the protection from negligence. However, it would seem prudent to specifically mention the release of or indemnification for a party’s negligence in the contract rather than leave it to a court’s interpretation.