Releases

A release is the relinquishment, concession, or giving up of a right, claim, or privilege, by the person in whom it exists or to whom it accrues, to the person against whom it might have been demanded or enforced[i].  The general rule is that a valid release which is clear and unambiguous on its face and which is knowingly and voluntarily entered into will be enforced as a private agreement between the parties[ii].

In other words, a release is a discharge of a claim or obligation and a surrender of a claimant’s right to prosecute a cause of action.  However, a release is not effective unless the party giving the release receives something of value to which the party was not otherwise entitled[iii].  Generally, a release is considered to be the final expression of a settlement and terminates litigation or a dispute[iv].

It is to be noted that, a person who is qualified to execute a release must possess the requisite mental capacity.  However, even if a party does not initially have the requisite mental capacity to execute a release, s/he can subsequently ratify his/her action when s/he regains his/her mental capacity[v].

Whereas, in the case of minors, a parent or guardian of a minor who has a claim against another person possesses the power to execute a full release.  However, before such a document is effective, it must be approved by the court upon the filing of a petition or motion[vi].

Generally, a release must be supported by consideration in order to be effective.  Such consideration must be valid[vii].  A release is a form of contract with consideration that surrenders a claim or course of action in exchange for the payment of funds, surrender, or an offsetting claim[viii].

However, a lack of valid consideration will void the release.  A court has jurisdiction to set aside a satisfaction of judgment upon the absence of consideration and can set aside a satisfaction of judgment made without consideration.  Similarly, a party who releases a judgment through mistake, fraud, or upon failure of the consideration for the release is entitled to have the judgment reinstated if necessary in order to avoid unjust enrichment.

It is to be noted that a release will not be treated lightly and will be set aside by a court only for duress, illegality, fraud, or mutual mistake.  In the absence of these factors, if the language of the waiver is clear and unambiguous, the claim by one party that it intended something else is insufficient to vitiate the waiver’s force and effect[ix].

The waiver and release are affirmative defenses which a person bears the burden of raising.  The failure to raise a release as an affirmative defense will result in a waiver of the defense[x].  It is to be noted that, a party asserting the affirmative defense of a release has the burden of proof.  Similarly, parties claiming to be third party beneficiaries under a release also have the burden of proof.

A party seeking to demonstrate that the enforcement of a release dismissal agreement is in the public interest must show both the objective and subjective elements.  Likewise, a party seeking to enforce the release dismissal agreement bears the burden of proof on both of these elements[xi].

However, a release will be void if it is against public policy.

While determining whether a release violates public policy, the court looks into the following factors:

  • Whether the release served two purposes not clearly identified or distinguished;
  • Whether the release was extremely broad and all inclusive;
  • Whether the release was in a standardized agreement printed on a form giving no opportunity for negotiation and free and voluntary bargaining.

However, if a release is voidable, then the releasor can bring an action at law to rescind or avoid the release.  Such an action must be brought by way of a pleading such as an answer or reply to the answer.  There must be a valid reason for seeking to avoid the release.  In some jurisdictions, there may also be a time requirement to challenge a release.

It is to be noted that only certain persons are bound by a release.  Generally, a party is not released unless s/he is named in the release.  Whereas in some jurisdictions, if a party is not specifically named or identified in the release, then there exists a rebuttable presumption that the party’s release was not intended.

[i] Macy v. United States, 557 F.2d 391 (3d Cir. Pa. 1977).

[ii] Falconieri v. A & A Discount Auto Rental, 262 A.D.2d 446 (N.Y. App. Div. 2d Dep’t 1999).

[iii] Lambertson v. Kerry Ingredients, Inc., 50 F. Supp. 2d 163 (E.D.N.Y. 1999).

[iv] Cunningham v. Goettl Air Conditioning, Inc., 194 Ariz. 236 (Ariz. 1999).

[v] Norfolk S. Corp. v. Smith, 262 Ga. 80 (Ga. 1992).

[vi] In re Estate of Brandon, 902 P.2d 1299 (Alaska 1995).

[vii] Vitkus v. Beatrice Co., 11 F.3d 1535 (10th Cir. Colo. 1993).

[viii] E.I. Du Pont de Nemours & Co. v. Florida Evergreen Foliage, 744 A.2d 457 (Del. 1999).

[ix] L & K Holding Corp. v. Tropical Aquarium, 192 A.D.2d 643 (N.Y. App. Div. 2d Dep’t 1993).

[x] Rivera-Flores v. Bristol-Myers Squibb Caribbean, 112 F.3d 9 (1st Cir. P.R. 1997).

[xi] Livingstone v. North Belle Vernon Borough, 91 F.3d 515 (3d Cir. Pa. 1996).


Inside Releases