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Supreme Court of California - 383 P.2d 441, 60 Cal. 2d 92
Tags: Contracts, Unconscionability, Public policy
tl;dr:
A research hospital had its patient sign an exculpatory agreement before receiving treatment.Video Summary
Case Summary
In Tunkl v. Regents of the University of California (1963), the California Supreme Court ruled that a patient couldn't be forced to waive their right to sue a charitable research hospital for negligence. The hospital tried to use a legal document containing an exculpatory clause to avoid responsibility, but the patient argued it violated public policy and there was a power imbalance. The court sided with the patient, declaring the clause unenforceable.
The court used Civil Code section 1668 to develop a six-factor test to decide if a contract affects public interest and can't exempt someone from liability. These factors are: (1) if the business is generally considered suitable for public regulation; (2) if the service provided is important to the public; (3) if the party provides the service to anyone who seeks it; (4) if the party has significantly more bargaining strength; (5) if the other party is under their control; and (6) if the other party is given a standardized contract without room for negotiation. The court agreed all factors applied in this case, making the exculpatory clause invalid.
This case is significant as it established an influential test for identifying contracts related to public interest and balancing the freedom of contract with public policy and social welfare protection. It also highlights how courts examine contracts involving essential services and unequal bargaining power.
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The court ruled that a release from liability for future negligence required for admission to a charitable research hospital is invalid under Civil Code section 1668 as it affects the public interest. Exculpatory provisions can only be enforced if they do not involve the public interest. Contracts involving private affairs are enforced, while those involving the transmission of telegraph messages and bailment are invalidated as they are contrary to public policy. The courts have established a framework for identifying contracts affected by the public interest, in which exculpatory provisions will be deemed invalid. These contracts involve businesses subject to public regulation, providing essential services to the public, and the party seeking exculpation has a decisive bargaining advantage. Exculpatory provisions in such contracts are invalid as the public policy is to place the risk of negligence on the party responsible for the activity, and if not followed, the risk should be shifted to a party that is better equipped to bear it, rather than to a weaker bargainer.
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