Are Exculpatory Clauses Enforceable in Colorado? Court of Appeals Clarifies the Limits of Liability Waivers

On Nov. 6th, the Colorado Court of Appeals issued a significant ruling on exculpatory clauses that clarifies the boundaries of liability waivers in premises liability cases. In Shive v. 24 Hour Fitness USA, LLC, the court held that an exculpatory clause in a gym membership agreement did not shield the fitness center from a premises liability lawsuit when a member slipped and fell on an icy sidewalk outside the building. This decision underscores an important principle: even when businesses include broad liability waivers in their contracts, Colorado courts will enforce them only when they clearly and unambiguously express what risks customers are actually waiving.

What Is an Exculpatory Clause?

An exculpatory clause is a contractual provision in which one party agrees not to hold the other party liable for injuries or damages that may occur. These clauses are also commonly called “liability waivers,” “releases of liability,” or “hold harmless agreements.”

You encounter exculpatory clauses regularly in everyday life. They appear in gym membership contracts, ski lift tickets, rock climbing facility agreements, rental agreements for recreational equipment, and various service contracts. Essentially, when you sign one of these agreements, you’re acknowledging certain risks and agreeing not to sue if you get hurt—at least under certain circumstances.

The purpose of exculpatory clauses is to allow businesses to manage risk and allocate potential costs. By having customers assume certain risks, businesses can potentially reduce insurance costs and avoid litigation over inherent dangers associated with their services or facilities. From a legal perspective, these clauses reflect the principle of freedom of contract—the idea that competent adults should be able to negotiate and agree to the terms of their relationships, including terms that release liability.

However, exculpatory clauses are not unlimited “get-out-of-jail-free” cards. Colorado law, like that of most states, carefully scrutinizes these provisions to ensure they don’t allow businesses to unilaterally escape responsibility for their own negligence in situations where public policy demands their accountability.

How Colorado Courts Evaluate Exculpatory Clauses

Colorado courts have long disfavored exculpatory agreements, recognizing the general principle that people should be responsible for damages caused by their own negligent acts, notwithstanding the  principle of freedom of contract. .

Despite this skepticism to the enforceability of exculpatory agreements, Colorado courts have recognized that in appropriate circumstances, competent parties, including companies that provide services to consumers, do have a contractual right to limit their liability and to allocate business risks in accordance with their business judgment. Thus, courts will enforce properly drafted exculpatory clauses if they meet certain criteria.

In the 1981 case Jones v. Dressel, the Colorado Supreme Court established a four-factor test for determining whether an exculpatory clause is valid:

1. The existence of a duty to the public – Does the party seeking to be released from liability have a duty to serve the public?
2. The nature of the service performed – Is the service one that affects the public interest?
3. Whether the contract was fairly entered into – Was there equal bargaining power, or was it a contract of adhesion (take-it-or-leave-it)?
4. Whether the intention of the parties is expressed in clear and unambiguous language – Does the clause plainly state that liability for negligence is being waived?

The fourth factor—clarity and unambiguity—has become the focal point in many more recent disputes over the enforceability of exculpatory clauses. This requirement ensures that people who sign these agreements actually understand what rights they’re giving up.

The Shive Decision: Language Matters

Matthew Shive was a member of 24 Hour Fitness who slipped and fell on ice that had accumulated on a sidewalk near the gym’s entrance after finishing his workout on a winter day. The fall caused a significant knee injury, and Shive sued the gym under Colorado’s Premises Liability Act (“PLA”), alleging that 24 Hour Fitness failed to properly maintain the area by not removing the ice.

24 Hour Fitness moved for summary judgment, arguing that the exculpatory clause in Shive’s membership agreement barred his lawsuit. The clause stated that members waive liability for injuries “resulting from the actions or inactions, including negligence, of 24 Hour” and specifically mentioned that “this Release of Liability includes, without limitation, claims against 24 Hour for negligence, premises liability, and products liability.”

The district court agreed with the gym and dismissed Shive’s case. However, the Colorado Court of Appeals reversed, focusing carefully on the specific language used in the contract’s exculpatory clause. The clause repeatedly referenced “using [24 Hour’s] facilities” but also stated that injuries could occur “whether said use or said injury is related to exercise or not.” Thus, a critical question became: what did “facilities” mean?

The Court’s Interpretation: “Facilities” Have Limits

The Court of Appeals conducted a thorough analysis of how a reasonable gym member would understand the term “facilities” in the context of the membership agreement. The court noted that other provisions of the agreement indicated that “facilities” referred to physical spaces with restricted access—places where only members could go to use 24 Hour’s recreational services.

The sidewalk where Shive fell, however, was publicly accessible. Non-members could walk on it. It wasn’t a space where 24 Hour provided recreational services like exercise equipment, swimming pools, basketball courts, locker rooms, or saunas. The court acknowledged that the exculpatory clause would certainly cover slip-and-fall accidents that occurred inside the gym building—on a gym floor, pool deck, or wet locker room floor, for example. But the clause’s language, when read as a whole, did not clearly and unambiguously extend to a public sidewalk outside the building.

Justice Lipinsky, writing for the division, emphasized that “the mere reference to ‘premises liability’ in the exculpatory clause does not overcome the clause’s clear limiting language or expand its scope to cover claims arising from injuries sustained outside the club building.”

The Shive court aligned its decision with previous Colorado cases that have limited exculpatory clauses in athletic club settings. In Stone v. Life Time Fitness (2016), a court held that a release didn’t bar a claim when a member tripped on a hair dryer cord in a locker room, finding the language focused on fitness activities. Similarly, in Doe v. Wellbridge Club Management LLC (2022), a court ruled that an exculpatory clause didn’t extend to sexual abuse claims despite broad language in the release.

Collectively, these cases establish that Colorado courts will look beyond boilerplate language to determine whether an exculpatory clause actually puts a reasonable person on notice of what they’re actually waiving. The focus remains on protecting parties from signing away rights without truly understanding the consequences.

Implications for Colorado Businesses and Consumers

The Shive decision has important implications for both businesses that use exculpatory clauses and consumers who sign them.

For businesses: This case demonstrates that courts will interpret ambiguities in exculpatory clauses against the drafter, which is consistent with the courts general disfavor toward such clauses. If a business wants comprehensive liability protection, including liability protection against injuries occurring in areas outside its primary service locations, it must say so explicitly (e.g. sidewalks, walkways, ingress, egress). Generic references to “premises” may not suffice if the overall context of the clause suggests it applies only to specific areas where services are provided.

For consumers: This ruling reinforces that even when you sign a liability waiver, you’re not necessarily giving up all rights to sue. Colorado courts will protect you from overly broad interpretations of waivers, especially when the language doesn’t clearly cover the type of accident that occurred.

The decision also reaffirms Colorado’s approach to balancing competing principles. While the law respects parties’ freedom to contract and allocate risks, it will not enforce exculpatory clauses that fail to clearly communicate the scope of what’s being waived.

Key Takeaways

The Shive v. 24 Hour Fitness decision serves as a reminder that exculpatory clauses in Colorado must do more than include magic words like “premises liability” or “negligence.” Exculpatory clauses must clearly and unambiguously express the parties’ intentions to waive specific types of claims and the circumstances under which they occur . When a liability waiver focuses on “facilities” and, “recreational services,” courts will interpret those terms in their natural context—limiting them to areas where those services are actually provided.

For businesses, it’s a clear signal: if you want broad protection, you need to draft your exculpatory clauses with precision and clarity, leaving no doubt about what risks you’re asking customers to assume.