Digital waivers are widely recognized as secure alternatives to paper and filing cabinets, but the formatting of your digital waiver can make all the difference.
We did a deep dive into the SkyZone court case in Louisiana; read on to learn about their court proceedings followed by 5 recommendations to protect your business.
Before we get started, keep this link handy. It will show you how you can edit the terms of your waivers and add formatting, bullet points, heading tags, and more!
If you want to add individual checkmarks to specific clauses of your waiver, images, and other pages to your waiver, simply contact Wherewolf at support@getwherewolf.com.
Case Summary:
James Duhon visited Sky Zone Lafayette, an indoor trampoline park, and had to sign a “Participant Agreement, Release and Assumption of Risk” (Agreement) before entering.
This Agreement included a clause that waived the participant’s right to a trial and required any disputes to be resolved through arbitration.
Mr. Duhon was injured while at Sky Zone and filed a lawsuit for damages.
Sky Zone tried to enforce the arbitration clause to dismiss the lawsuit, but the district court rejected this. The appeals court, however, sided with Sky Zone, saying the arbitration clause should be enforced.
Court Decision:
The Supreme Court of Louisiana reversed the appeals court’s decision, ruling that the arbitration clause was an unfair, adhesionary contract and therefore unenforceable.
Key Points:
What Happened:
On April 19, 2015, James Duhon and three minors went to Sky Zone Lafayette.
They were required to fill out a digital Participant Agreement before entering, which included a clause to waive the right to a trial and agree to arbitration for any disputes.
The Injury:
Mr. Duhon was injured due to alleged negligence by Sky Zone and sued the company.
Sky Zone argued that Mr. Duhon had agreed to arbitration and therefore could not sue in court.
Lower Courts:
The district court ruled against Sky Zone, saying the arbitration clause was not valid.
The appeals court overturned this, enforcing the arbitration clause based on a strong presumption favoring arbitration agreements.
Supreme Court of Louisiana Ruling:
The Supreme Court reviewed the case and found the arbitration clause was hidden within a lengthy paragraph in the Agreement, and ruled that Mr. Duhon did not truly consent to the arbitration clause because it was not clearly presented.
Additionally, the arbitration clause was one-sided, only binding Mr. Duhon to arbitration and not Sky Zone.
Conclusion:
The arbitration clause in the Sky Zone Participant Agreement was deemed unfair and not enforceable because it was hidden within other terms and was only binding on the participants, not Sky Zone. Therefore, Mr. Duhon’s lawsuit could proceed in court.
Business owners can extract crucial insights from this case to improve the formatting and enforceability of their digital waivers.
Here are 5 actionable recommendations:
1. Prominent Display And Appropriate Formatting
Lesson: The arbitration clause in the Sky Zone case was deemed hidden, which contributed to its unenforceability.
Recommendation: Be transparent about all terms and conditions; arbitration clauses should be clearly visible and not buried within the document. Wherewolf users can format headings, bold fonts, and even different colors to make clauses stand out!
Important clauses, such as arbitration agreements, should be placed in their own distinct paragraphs or included with their own agreement checkboxes – this separation helps draw attention to critical sections and reduces the risk of them being overlooked.
Consider placing them in their own distinct sections to avoid any perception of concealment.
2. Clear and Readable Language
Lesson: The readability of the contract was a significant factor in the court’s decision.
Recommendation: Use a font size and style that is easy to read, and avoid small print or fonts that are difficult to decipher. Ensure that the entire document is presented in a consistent and professional manner for easy reading and comprehension – the goal is to inform, not outmanoeuvre, your guests! Clear and straightforward language enhances transparency and helps ensure that customers fully understand what they are agreeing to. Avoid hiding important terms in dense or convoluted language.
3. Obvious Consent Mechanisms
Lesson: The lack of clear consent mechanisms for the arbitration clause was a problem.
Recommendation: Use checkboxes, initials, or signature fields for critical sections to ensure the customer is aware and consents to those specific terms. For digital waivers, electronic signatures or tick boxes next to important clauses can be effective – Wherewolf users can contact our support team to find out about our different page types.
4. Mutual Obligations
Lesson: The court found the Sky Zone agreement lacked mutuality, binding only the customer to arbitration.
Recommendation: Ensure that the waiver includes mutual obligations for both parties, and avoid clauses that bind only the customer while leaving the business free from similar constraints. For instance, if the customer is required to arbitrate disputes, the business should be equally bound by this agreement and you should strive to balance the power between the business and the customer. Avoid terms that heavily favor the business at the expense of the customer to ensure that the waiver reflects a fair agreement where both parties have obligations and rights.
5. Opportunity to Read and Understand
Lesson: Customers should be given sufficient opportunity to read and understand the waiver.
Recommendation: Provide ample opportunity for customers to read and understand the waiver, such as with Wherewolf’s pre-arrival waiver, so they have time to raise any concerns they have about the agreement terms. Additionally, consider providing summaries or FAQs for more complex sections to aid understanding.
Key Quotes from the Case
To further illustrate the points discussed, here are some key quotes from the court’s decision:
“The determination of whether an arbitration clause in a standard form contract is adhesionary is necessarily made on a case by case basis. Based on the facts of this case, the concealment of the arbitration clause and the lack of mutuality compels us to find the arbitration clause in the Sky Zone Agreement is adhesionary and unenforceable.”
“By concealing the existence of the arbitration agreement, this agreement deprives a party of redress in the justice system. To make a bad situation worse, this agreement does not bind Sky Zone to arbitration, yet it penalizes a Sky Zone patron–but not Sky Zone–for seeking to initiate a lawsuit.”
https://recreation-law.com/2018/03/13/duhon-v-activelaf-llc-2016-0818-la-10-19-16-2016-la-lexis-2089/