Characteristics of the type of transaction in which exculpatory provisions will be held invalid include the following: (1) as a result of the essential nature of the service performed by the party invoking exculpation, 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; (2) 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; and (3) as a result of the transaction, the person or property of the purchaser is placed under the control of the seller, subject to the risk of carelessness by the seller or his agents.
The patient brought this action to recover damages for personal injuries alleged to have resulted from the negligence of two physicians in the employ of the a hospital operated and maintained by defendant Regents as a nonprofit charitable institution. The jury returned a verdict in favor of the Regents based on the patient's execution of an agreement releasing the medical center from liability for services provided to him. On appeal, the court held that the exculpatory provision in the agreement was invalid under Cal. Civ. Code § 1668 because it affected the public interest. The court reversed the lower court's judgment.
Did the trial court err in holding that the exculpatory provision exempting defendant from liability was valid?
The court found that the agreement exhibited all of the characteristics set forth by the courts of the type of transaction in which exculpatory provisions would be held invalid, including the following: (1) the agreement involved an institution subject to public regulation; (2) the hospital's services to those who needed the particular skill of its staff and facilities constituted a practical and crucial necessity; and (3) the hospital held itself out as willing to perform its services for those qualified members of the public.