Brief Fact Summary. Plaintiff Ella O’Callaghan, a tenant of a building owned by Defendant Waller & Beckwith Realty Co. fell while crossing the paved courtyard of the apartment building. She sued to recover damages but was denied recovery due to an exculpatory clause in her lease relieving Defendant of liability from personal injuries caused by any act or neglect of Defendant.
Synopsis of Rule of Law. An exculpatory clause is generally enforced “unless (1) it would be against the settled public policy of the State to do so, or (2) there is something in the social relationship of the parties militating against upholding the agreement.”
As Mr. Justice Holmes stated, pretty much all law consists in forbidding men to do some things that they want to do, and contract is no more exempt from the law than other acts.View Full Point of Law
Issue. Is the exculpatory clause valid and enforceable?
Held. Yes. Exculpatory clauses are generally enforceable provided that they do not violate the settled public policy of the State or something in the social relationship of the parties militates against upholding the agreement. In this case sub judice, Plaintiff argued that the exculpatory clause must be held to be contrary to public policy because a housing shortage caused landlords to have superior bargaining power. However, the Illinois Supreme Court rejected this argument. Plaintiff did not show that she looked for apartments elsewhere or attempted to negotiate with the defendant to modify or eliminate the exculpatory clause. Therefore, the exculpatory clause is enforceable, and Plaintiff’s action is barred.
Dissent. The majority ignores the facts in evidence, specifically that even though Plaintiff did not negotiate for the removal of the exculpatory clause; Defendant admitted that an apartment would not be rented if a person refused to sign the form lease. The exculpatory clause should not be enforced since the parties occupy vastly different bargaining positions.
Discussion. Exculpatory clauses absolving a party of liability are generally enforced unless against public policy.