Written by Jonty Osborn
Candidate Attorney at Mooney Ford Attorneys
Introduction
Due to the incident of the OceanGate submersible, where the submersible imploded upon itself, it is important to note the importance of examining the enforceability of waivers in cases of material non-disclosure. The OceanGate submersible required its passengers to sign a liability waiver before embarking on their trip. It has recently come to light that OceanGate failed to disclose crucial information regarding the submersible’s suitability for deep-sea exploration.
The concept of a waiver
A waiver is a voluntary surrender or abandonment of a known right or claim. For a waiver to be valid and therefore enforceable, the following requirements must be met; a waiver should be clear, unambiguous, and entered into with full knowledge and understanding of the rights and or claim being waived, and the parties must have legal capacity. The waiver must be adequately defined to avoid disputes.
Parties to a contract have a duty to disclose material facts that may affect the other party’s decision. Material non-disclosure occurs when there is a failure to disclose important information that would have influenced the decision of one party if it were known. Failure to disclose such information can potentially impact the enforceability of a waiver and validity of the contract.
Enforceability of waivers when there has been a material non-disclosure
The non-disclosure must be wrongful through non-disclosure of material facts to affect the enforceability of the waiver. Materiality is important when referring to non-disclosure. The duty of disclosure applies to material facts. Materiality is determined objectively. The test assesses the effect of the non-disclosure and whether a reasonable person would objectively defer from the standard of care usually required. A party cannot be expected to waive rights or liabilities of which they were unaware due to material non-disclosure.
The various legal aspects that need to be considered when determining the enforceability of waivers when there has been a material non-disclosure are as follows:
It is important to note that these are determined on a case-by-case basis. The courts will often scrutinize the enforceability of waivers when a material non-disclosure is involved. If the non-disclosure is vital to the agreement, then courts may view the waiver as voidable or unenforceable.
Materiality of non-disclosure: If non-disclosure was material, then it can impact the enforceability of the wavier but if the non-disclosure was immaterial then the waiver would most likely be enforced.
Knowledge and intent of the waiving party: If the party waiving their rights knew of the material non-disclosure and decided to waive their rights irrespective of said knowledge then the waiver may be enforceable.
Misrepresentation or fraud: If the non-disclosure was fraudulent or involved misrepresentation, it can affect the enforceability of the waiver.
Public policy considerations: If enforcing the waiver would be contrary to public policy or would in some form of unfairness, the court can refuse to enforce the waiver.
The case of Pienaar v Southern Insurance Association Ltd [1983] 1 All SA 268 (C), confirmed that the various legal aspects that need to be considered when determining the enforceability of waivers when there has been a material non-disclosure are materiality, knowledge, misrepresentation, and public policy.
Conclusion
Material non-disclosure occurs when there is a failure to disclose important information that would have influenced the decision of one party if it were known. Failure to disclose such information can potentially impact the enforceability of a waiver and validity of the contract. Regarding the Oceangate scenario, they required the passengers to sign a liability waiver before embarking on their trip. OceanGate failed to disclose crucial information regarding the submersible’s suitability for deep-sea exploration. This would affect the enforceability of the waiver.
Photo by Leon Seibert on Unsplash
