Will South Dakota enforce this clause releasing or capping our liability to the other party?
Yes, for ordinary negligence. SDCL 53-9-1 makes a contract provision "contrary to an express provision of law or to the policy of express law" unlawful, and SDCL 53-9-3 puts only a narrow set of misconduct against that policy. The statute provides: "All contracts which have for their object, directly or indirectly, to exempt anyone from responsibility for his own fraud or willful injury to the person or property of another or from violation of law whether willful or negligent, are against the policy of the law." Domson, Inc. v. Kadrmas Lee & Jackson, Inc. confirms the negative implication directly: "Although SDCL 20-9-1 mandates responsibility for injury caused by willful acts or want of ordinary care or skill, nothing in this statute prohibits one party from agreeing by contract to release a third party from liability for ordinary negligence."
The trap
Section 53-9-3's three categories (the drafter's own fraud, willful injury, and a willful OR negligent violation of law) are not the same as "any negligence claim." In Domson the Supreme Court rejected the CONTRACTOR-plaintiff's attempt to void the engineering contract's exculpatory clause under § 53-9-3 where its own claim was professional negligence: the court held that "Domson's suit against Dakota Engineering and KLJ alleges professional negligence, not a willful or negligent violation of law," so the clause fell outside the statute's third category even though ordinary negligence in the broad sense was involved. A clause releasing the drafter from its own ORDINARY negligence is therefore enforceable in South Dakota unless the claim can be recharacterized as fraud, willful injury, or a violation of some other law (willful or negligent) distinct from the general duty of ordinary care in SDCL 20-9-1. Domson marks the outer limit of that recharacterization by quoting Holzer v. Dakota Speedway, Inc.: "releases that are construed to cover willful negligence or intentional torts are not valid and are against public policy." The result matched the rule and the clause stood: "Also, Domson has not presented specific facts showing that a genuine, material issue exists for trial that Dakota Engineering/KLJ's design and drafting fell below a professional standard of care. Therefore, we affirm." Nothing read for this rule decides whether SDCL 53-9-3 treats GROSS negligence differently from ordinary negligence (Holzer's "willful negligence" is the nearest marker and is not the same thing), or how a clause fares against a personal-injury claim as opposed to the professional-negligence claim in Domson; those are open questions this rule does not resolve.
6 authorities
- statuteSDCL § 53-9-3enactment date not established
The words that state the rule
All contracts which have for their object, directly or indirectly, to exempt anyone from responsibility for his own fraud or willful injury to the person or property of another or from violation of law whether willful or negligent, are against the policy of the law.
- case918 N.W.2d 396Domson, Inc. v. Kadrmas Lee & Jackson, Inc.S.D.decided 2018read it at the source ↗
The words that state the rule
Although SDCL 20-9-1 mandates responsibility for injury caused by willful acts or want of ordinary care or skill, nothing in this statute prohibits one party from agreeing by contract to release a third party from liability for ordinary negligence.
- case918 N.W.2d 396Domson, Inc. v. Kadrmas Lee & Jackson, Inc.S.D.decided 2018read it at the source ↗
The words that state the rule
Domson’s suit against Dakota Engineering and KLJ alleges professional negligence, not a willful or negligent violation of law.
- statuteSDCL § 53-9-1enactment date not established
The words that state the rule
A contract provision contrary to an express provision of law or to the policy of express law, though not expressly prohibited or otherwise contrary to good morals, is unlawful.
- case918 N.W.2d 396Domson, Inc. v. Kadrmas Lee & Jackson, Inc.S.D.decided 2018read it at the source ↗
The words that state the rule
Accord Holzer v. Dakota Speedway, Inc., 2000 S.D. 65, ¶ 16, 610 N.W.2d 787, 793 (“releases that are construed to cover willful negligence or intentional torts are not valid and are against public policy”).
- case918 N.W.2d 396Domson, Inc. v. Kadrmas Lee & Jackson, Inc.S.D.decided 2018read it at the source ↗
The words that state the rule
Also, Domson has not presented specific facts showing that a genuine, material issue exists for trial that Dakota Engineering/KLJ’s design and drafting fell below a professional standard of care. Therefore, we affirm.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.