Opinion ID: 2633615
Heading Depth: 1
Heading Rank: 10

Heading: The waiver was validly executed.

Text: Citing Krohnert v. Yacht Sys. of Hawaii, 4 Haw.App. 190, 201, 664 P.2d 738, 745 (1983), the Courbats assert that, because they manifested no clear and unequivocal acceptance of the terms of the waiver, the waiver cannot be enforced against them. However, pursuant to the following analysis, we hold that, if the trier of fact finds that the failure to inform the Courbats of the waiver requirement was not a deceptive trade practice, then the waiver, in all other respects, was valid. The general rule of contract law is that one who assents to a contract is bound by it and cannot complain that he has not read it or did not know what it contained. Leong v. Kaiser Found. Hosps., 71 Haw. 240, 245, 788 P.2d 164, 168 (1990); see also Joaquin v. Joaquin, 5 Haw.App. 435, 443, 698 P.2d 298, 304 (1985); In re Chung, 43 B.R. 368, 369 (Bankr.D.Haw.1984); In re Kealoha, 2 B.R. 201, 209 (Bankr.D.Haw.1980). Furthermore, `[p]arties are permitted to make exculpatory contracts so long as they are knowingly and willingly made and free from fraud. No public policy exists to prevent such contracts.' Fujimoto v. Au, 95 Hawai`i 116, 156, 19 P.3d 699, 739 (2001) (some brackets omitted) (quoting Gen. Bargain Ctr. v. Am. Alarm Co., Inc., 430 N.E.2d 407, 411-12 (Ind.Ct.App.1982)). [S]uch bargains are not favored, however, and, if possible, bargains are construed not to confer this immunity. Fujimoto, 95 Hawai`i at 155, 19 P.3d at 738. Therefore, as a general rule, '[e]xculpatory clauses will be held void if the agreement is (1) violative of a statute, (2) contrary to a substantial public interest, or (3) gained through inequality of bargaining power.' 95 Hawai`i at 156, 19 P.3d at 739 (quoting Andrews v. Fitzgerald, 823 F.Supp. 356, 378 (M.D.N.C.1993)). The Courbats have not alleged that any of the terms of the waiver, or the use of a waiver by the Ranch, violates a statute; on the contrary, the Courbats concede that waivers are an acceptable method by which tour operators may seek to limit their liability in response to rising insurance and litigation costs. In Krohnert, the ICA defined the public interest as involving some or all of the following characteristics: [1] It concerns a business of a type generally thought suitable for public regulation. [2] The party seeking exculpation is engaged in performing a service of great importance to the public, which is often a matter of practical necessity for some members of the public. [3] The party holds himself out as willing to perform this service for any member of the public who seeks it, or at least for any member coming within certain established standards. [4] As a result of the essential nature of the service, in the economic setting of the transaction, the party invoking exculpation possesses a decisive advantage of bargaining strength against any member of the public who seeks his services. [5] In exercising a superior bargaining power the party confronts the public with a standardized adhesion contract of exculpation and makes no provision whereby a purchaser may pay additional reasonable fees and obtain protection against negligence. [6] Finally, as a result of the transaction, the person or property of the purchaser is placed under the control of the seller of the service, subject to the risk of carelessness by the seller or his agents. 4 Haw.App. at 199, 664 P.2d at 744 (finding under this test that the exculpatory clause contained in a contract for marine surveying was permissible) (brackets omitted) (quoting Lynch v. Santa Fe Nat'l Bank, 97 N.M. 554, 627 P.2d 1247, 1251-52 (N.M.Ct.App.1981) (holding that services of escrow agents in New Mexico were not in the nature of a public service so as to render an exculpatory clause unenforceable) (quoting Tunkl v. Regents of Univ. of Cal., 60 Cal.2d 92, 32 Cal. Rptr. 33, 383 P.2d 441, 445-46 (1963) (declaring invalid as against the public interest an exculpatory clause for future negligence required for admission to a public research hospital))); see also 15 Corbin on Contracts § 85.18 (2003 & Supp.2005) (summarizing a similar test commonly used by courts and noting that courts tend to enforce exculpatory clauses for recreational activities under the test). [12] Entities that have been found to fall under the public interest doctrine, rendering exculpatory clauses void, include common carriers, see Adams Express Co. v. Croninger, 226 U.S. 491, 509, 33 S.Ct. 148, 57 L.Ed. 314 (1913); Shippers Nat'l Freight Claim Council, Inc. v. Interstate Commerce Comm'n, 712 F.2d 740, 746 (2d Cir.1983); Clairol, Inc. v. Moore-McCormack Lines, Inc., 79 A.D.2d 297, 309-10, 436 N.Y.S.2d 279 (N.Y.App.Div.1981), and hospitals, see Tunkl, 32 Cal.Rptr. 33, 383 P.2d at 447; Smith v. Hosp. Auth. of Walker, Dade & Catoosa Counties, 160 Ga.App. 387, 287 S.E.2d 99, 101 (1981); Belshaw v. Feinstein, 258 Cal.App.2d 711, 65 Cal.Rptr. 788, 798 (1968). Applying these factors to the present matter, we determine that the public interest here is not at stake: recreational activity tours are not generally suitable to public regulation, in the manner of common carriers, nor of great importance to the public, nor of an essential nature, in the manner of medical care, such that the provider's bargaining power is greatly enhanced over any member of the public seeking their services. Finally, as the United States District Court for the District of Hawai`i noted, in considering negligence waivers in the context of recreational activity, while such waivers may be contracts of adhesion, in that they are presented on a take-it-or-leave-it basis, they are not unconscionable, but are of a sort commonly used in recreational settings and are generally held to be valid. Wheelock v. Sport Kites, Inc., 839 F.Supp. 730, 736 (D.Haw.1993). [C]ontracts [of adhesion] are `unenforceable if two conditions are present: (1) the contract is the result of coercive bargaining between parties of unequal bargaining strength; and (2) the contract unfairly limits the obligations and liabilities of, or otherwise unfairly advantages, the stronger party.' Fujimoto, 95 Hawai`i at 156, 19 P.3d at 739 (quoting Brown v. KFC Nat'l Mgmt. Co., 82 Hawai`i 226, 247, 921 P.2d 146, 167 (1996)); see also Wheelock, 839 F.Supp. at 735 ([A]dhesion contracts are fully enforceable provided that they are not unconscionable and do not fall outside the reasonable expectations of the weaker or adhering party.). Unequal bargaining strength involves the absence of alternatives; specifically whether the plaintiffs were `free to use or not to use' [the] defendant's... services. Krohnert, 4 Haw.App. at 199, 664 P.2d at 744 (quoting Lynch, 627 P.2d at 1250). These conditions are generally not germane in the recreational waiver context. In the context of a recreational sport or adventure activity, freely undertaken for pleasure, coercive bargaining and an absence of alternatives are terms that hold little meaning. In the present matter, Lisa read through and responded to queries contained in the waiver form and had no further questions or concerns regarding the contents before she signed it. Steven conceded that he routinely relied on his wife to review documents before signing them and that he knew he was waiving rights when he signed the form. The record demonstrates that the Courbats were given adequate time and opportunity to fully review the waiver presented to them before they signed it and that both knew that by signing it they were waiving legal rights in return for being allowed to participate in the ride. In short, there is no evidence of coercion. By signing the waiver form, they demonstrated that they agreed to its terms, and by reading it, or, in Steven's case, in relying on the advice of his wife, demonstrated knowledge of its contents. Moreover, they had signed similar waivers that week for another activity and were familiar with what they represented. Accordingly, we hold that, if the trier of fact determines that the nondisclosure of the waiver was not an unfair or deceptive trade practice, the Courbats' waiver was valid.