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Ch. 7 - Exculpatory Contracts

1) What is an exculpatory contract?

  1. Which affords you better protection from liability losses: an exculpatory contract or adequate liability insurance?
  2. You manage an air charter company operating under 14 CFR Part 135. The premium for the liability portion of your aircraft insurance is one of the business’s major expenses. Can the company drop that insurance and protect itself by having passengers sign an exculpatory contract instead? Why?
  3. Are there any states in which exculpatory contracts are void and unenforceable as a matter of law? If so, where?
  4. Can an enforceable exculpatory contract be created by “fine print” on the back of an admission ticket to an air show if the ticket is neither read nor signed by the spectator?
  5. You are starting a commercial operation offering suborbital space flights. You find that you cannot buy liability insurance for this operation, at any price. What, if anything, can you do to manage the risk of liability for injury to your wealthy but adventuresome passengers?
  6. You are operating a commercial skydiving school. Before jumping, each parachutist is required to sign an exculpatory contract drafted by the school’s lawyer. Assume the contract to be legally valid in your state. A jumper experiences a main parachute malfunction and fails to follow the proper sequence of emergency procedures to deploy her reserve parachute, so that it becomes entangled with the malfunctioned main chute. Plummeting to earth at a high rate of speed, the jumper lands on a resident who is mowing his lawn, killing them both.
    1. Will the exculpatory contract protect the skydiving school from a lawsuit by the jumper’s spouse claiming that the school negligently trained and supervised the jumper? Explain.
    2. Will the exculpatory contract protect the school against a lawsuit by the spouse of the deceased resident, claiming that the school was negligent in training and supervising the parachutist? Why?
  7. You are operating a commercial civilian air combat maneuvering school. Because you have found the cost of aircraft liability insurance for these operations prohibitive, you are having each customer of your $500 “fighter pilot for a day” program sign an exculpatory contract. A sharp, mature, and robust local high school football star has received a gift certificate for your course as a seventeenth birthday present from his parents.
    1. If he signs your exculpatory contract, will that protect you and your business from a lawsuit in the event that he is injured?
    2. What will you do, and why?

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