A Release of Liability, also known as a liability waiver, is an agreement between two parties where one party gives up all legal or financial claims against the other party in exchange for compensation.

A claim is an official demand for money, property, or the enforcement of a legal right. Claims can arise after a dispute or accident from which one party suffers damages such as an injury, damaged property, or financial loss. When a legal or financial claim isn't resolved, a lawsuit usually follows.

However, when you sign a Release of Liability, you waive your right to make any claims against the other party in the agreement. As a result, liability waivers are often used to settle disputes outside of court so both parties can avoid the time and costs associated with a legal battle.

Both a waiver and a release are contractual agreements in which a party relinquishes their right to make a claim against another party.

However, the main difference is that a waiver is typically signed as a precaution, before an incident occurs or any claims are brought forward, so that a party is protected from liabilities regardless of whether or not a dispute arises. In contrast, a release can be signed before or after a dispute arises in order to free an individual from the liabilities associated with both known and unknown claims.

It should be noted that the two terms are often used interchangeably and are generally understood to mean that one party agrees not to pursue legal action or hold the other party liable.

LawDepot provides seven templates customised for different situations in which a Release of Liability is commonly used.

General release of claims: This is a broad release for all possible civil claims that can be used in a variety of situations, like between an employer and employee or a contractor and client.

For example, a landscaping company might ask their employees to sign a general release so they aren't held liable for injuries (e.g. pulled muscles, cuts, or bruises) that are likely to occur on the job as a result of normal, daily operations.

Motor vehicle accident release: This release is suited for disputes that originate from a car accident (e.g. disputes over minor injuries or vehicle damage). In this case, you can choose to release the other driver's insurance company from any civil claims in addition to releasing the other driver personally.

Activity waiver and release: An activity provider (e.g. a bouncy castle operator at a child's birthday party) might ask participants to sign this type of release before they engage in the activity or event. By signing the release, participants acknowledge the potential for property loss or personal injury as a result of the activity, and agree not to hold the activity provider liable in the event of a dispute.

Damage to personal property release: Also known as a damage waiver, this type of release is useful for settlements related to the minor damage of someone's personal property.

For instance, a fallen branch might have broken your window when your neighbor was pruning their trees; in this case, your neighbour might pay you for the cost of repairing the window in exchange for your signature on the release.

Debt settlement release: With this release, someone who is owed a debt may accept less than what they are legally entitled to because of a dispute over the amount of the debt.

For instance, a client may dispute the amount of money they owe a cleaning service because they were unsatisfied with the job. So, the cleaners might accept a payment that is smaller than what they originally charged in order to reach a settlement with the client.

This release can also be used when a debtor is unable to repay the full amount of a debt and the lender agrees to accept a lessor amount as a final settlement.

Mutual release: With a mutual release, each party in the agreement has suffered injury or damage that they feel has been caused by the other party. Instead of each party claiming against the other, both parties agree to release the other from future liability.

For example, imagine a graphic designer creates a logo based on a client's wishes but the logo isn't exactly what the client wanted. The client understands they weren't clear about their expectations from the beginning and the designer realizes they are not the right person for this particular project. In this case, the parties might agree to end their contract and release each other from all future liabilities.

Personal injury release: This liability waiver is often used when someone suffers a minor injury (either physical or psychological) and agrees not to sue in exchange for compensation.

For example, a child might have fallen off their bike under their nanny's supervision and suffered a minor concussion because they were not wearing their helmet. The nanny might ask the child's parents to sign the personal injury release in exchange for a small sum of money.

In general, a Release of Liability is a legally binding contract in which one or two parties in the agreement waive their right to sue. Courts will typically enforce such an agreement after considering a number of factors:

• Whether or not the parties fully understood the context of the waiver
• If it appears one party was taken advantage of by the other
• Whether or not compensation was exchanged
• If the waiver appears to be excessive or beyond reason (i.e. unconscionable)
• Whether or not the releasee (the party who is freed from liability) was negligent in their duty to provide due care

It's recommended you consult your local laws or an attorney to understand how different waivers may be enforced in your jurisdiction.