How to Use a Liquidated Damages Clause in Utah Contracts

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Not your car. Not my car. Note the little sticker on the front bumper: don’t touch.

What happens when you suffer harm from a breach of contract that you cannot prove or would have a very difficult time proving? Such as for a delay? Often your damages will go unreimbursed.

One typical situation is for delay in contract performance– “Time Is Money,” right? The proof of damages under this axiom is often nearly impossible or at least impractical. For example, if a construction delay causes you to open your new business four weeks later than planned, how do you prove damages? You have no history of income and it would be claimed that any damages would be pure speculation. Enter liquidated damages. Continue reading “How to Use a Liquidated Damages Clause in Utah Contracts”

The Open and Obvious Hazard Defense to Premises Liability Claims in Utah

 

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In Utah, claims against landowners, i.e., ‘premises liability’ claims, are subject to the ‘open and obvious hazard‘ defense. This defense is the assertion that the injured person failed to protect themselves from a risk that should have been apparent to them. Businesses and landowners who may have customers, clients, or patrons visit their property should beware, however, that this defense is not absolute and should take reasonable precautions.

Utah’s Open and Obvious Rule

The Utah Supreme Court clarified the open and obvious defense in Hale v. Beckstead, 2005 UT 24. The Hale court cited the Second Restatement of Torts Sections 343 and 343A as the source of Utah’s defense and not ‘common law’– prior Utah judge-made law. The Restatement states the responsibilities of both a landowner and a person who is present on the land. I will restrict this post to the those present on the land legally either by express or implied invitation, known as ‘invitees.’ Duties owed to trespassers and others is a subject for another day.

The Restatement version of the open and obvious danger rule also does not act as a complete bar to the recovery of a plaintiff injured as a result of another’s negligence. Hale ¶23.

Utah law, relying on the Restatement, sets up a number of situations that defeat an open and obvious danger defense. Each is based on the general proposition that a landowner owes a duty to “protect invitees against dangers of which [the invitee] are unaware, may forget, or may reasonably encounter despite the obviousness of the danger.” Hale at ¶27. A landowner is potential liable to an invitee if the landowner:

  1. knows or by the exercise of reasonable care would discover the condition, and should realize that it involves an unreasonable risk of harm to such invitees, and
  2. should expect that an invitee will not discover or realize the danger, or will fail to protect themselves against it, and
  3. fails to exercise reasonable care to protect an invitee against the danger.

In essence, if a landowner “should expect that [an invitee] will . . . fail to protect [himself] against [a dangerous condition],” the landowner must exercise reasonable care to protect him.

A typical situation might be a balcony without a railing. The danger, although obvious, involves an unreasonable risk of harm and could be encountered by children who may not recognize the danger or fail to protect themselves.

Just because a dangerous condition on your property is ‘open and obvious’ does not end the analysis. Landowners whose property is open to the public or to any invitee must exercise reasonable care. If you have any question about what you are required to do, ask your attorney or insurer.

Apportionment of Fault

The Hale court made it clear that the open and obvious defense fits nicely into Utah’s comparative fault scheme. The defense formerly was a complete bar to an invitee’s claim against a landowner. Under Utah’s prior scheme, “a person who bore any portion of fault, no matter how slight, for his own injuries was barred from recovering against the primary tortfeasor.” Hale at ¶19. No longer. Long ago (1973!) Utah adopted comparative fault. This means that the fault of each party is compared and percentages of fault assigned. The defense simply establishes a higher bar for an injured invitee before the invitee can establish liability and get cash. Still, an injured invitee’s fault must be less than the fault apportioned to the landowner in order to prevail at all. (If you are curious and want to drill down on this issue, see U.C.A. § 78-27-38, et seq.).

The Hale court made it clear that if there is no duty to warn an invitee of a danger then the comparison of fault never takes place. An invitee must first prove a duty existed and then prove that the landowner failed to meet that duty before any comparison of fault is ever performed.

Hale also made it clear that landowners are free to maintain an obvious danger on their property. The duty inform or protect arises when invitees are present:

This duty does not require that landowners fully remedy potentially unsafe conditions, only that landowners adequately warn invitees about such dangers. Where the danger is so obvious such that no warning is necessary to alert an invitee, the possessor of land is not required to give the warning anyway unless other circumstances, discussed above, warrant. Hale at ¶30.

Take-Away

If you own property, you are responsible to either keep it free of unsafe conditions or warn anyone coming onto your land of the unsafe condition. The Hale court defined in simple terms the requirements and how a landowner’s duties are applied and the hurdles an invitee must overcome when injured by an open and obvious condition on land.

An example comes to mind. Just the other day, my son had a friend over to play. We had built a platform on a hillside that was supposed to be the floor of a playhouse. Well, the playhouse was never built and the platform has been through at least two winters and is getting ‘weathered.’ I suspected but never confirmed that the boards had rotted and were unstable. My son’s friend confirmed my suspicion and fell through the boards and down the hill. Fortunately he was not hurt and considers his scratches a badge of honor and proof of a great story. (The platform you must understand is on a very steep hillside and the fall was substantial for a 10 year-old).

If my son’s friend had been injured, I would likely face liability for failing to ‘exercise reasonable care to discover’ the dangerous condition and either prevent the injury or warn of the dangerous condition. I do not recommend following my example. Be careful out there!

If you have questions, you should ask them- contact me, Utah attorney Ken Reich. I regularly represent companies and the individuals and families that own them. My job is to know and understand my clients and their goals. Together with the right legal experts, I can help you get the result you want.

Utah Law Governing Non-Competition Agreements – April 2017 Update

20150823_175608The Utah Legislature recently passed and Governor Herbert signed a law in 2016 limiting non-competition agreements. It can be found at Utah Code Ann. 34-51-101, et seq. Please note that I updated this article as of April 2017. When the law initially started through the Legislature, it seriously limited non-competition covenants. The end result was much tamer.

Here are the highlights of the non-competition statute:

  • Post-employment restrictive covenants, i.e., non-competition agreements, are limited to one year from the date of separation;
  • The statute does not apply to clauses concerning non-solicitation, non-disclosure, or confidentiality;
  • Exceptions to the one-year time limitation include the following:
    • Severance agreements that are reasonable and mutually and freely agreed upon in good faith after separation; and
    • Agreements in conjunction with the sale of a business.
  • Attorney fees: The employer will be liable to the employee if the non-competition agreement is found to be unenforceable. Although Utah has typically found attorney fee provisions to be reciprocal (i.e., both sides can be the recipient of fees, depending on who prevails), the statute does not expressly provide for fees to the employer. The prudent employer, therefore, will include an attorney fee provision providing fees to the prevailing party to ensure that the employer can recoup attorney fees if it prevails.

The statute defines non-competition agreements as any agreement in which an employee or former employee agrees they “will not compete with the employer in providing products, processes, or services that are similar to the employer’s products, processes, or services.”

One other note: the law in Utah is unsettled as to confidentiality agreements that act like a non-competition agreement but you should tread carefully. Utah courts are often pragmatic and if it talks like a duck and walks like a duck, the court will likely call it a duck. See Is Your Non-Disclosure Agreement a Non-Compete Agreement in Disguise? This simply means that you should carefully draft your confidentiality and non-competition agreements. You may find yourself with a void agreement if it is poorly drafted.

Effective Date: The law affects any agreement entered on or after May 10, 2016. The statute is not expressly retroactive.

Bad-Actor Employers Warned: Lastly, the statute imposes damages against an employer who seeks to enforce non-competition provisions that are found to violate the statute. The damages available to an employee include any costs of an arbitration, attorney fees and court costs, and actual damages.

Take-Away: Employers should reevaluate their severance agreements and employment agreements to ensure that such agreements are consistent with this new law. For many employers, the non-competition provisions are part of the employment contract signed when the employee is hired. Its effect is not felt until (hopefully) many months or years later when the employee leaves. It is important, then, that employers review their employment contracts now since later is too late.

There are issues and nuances that cannot all be addressed here. If you have questions, you should get specific legal advice. If you would like more information about employment, non-competition, non-solicitation, confidentiality, or non-disclosure agreements, call me, Utah attorney Ken Reich, directly. I have represented both companies and individuals in business matters and disputes involving employment agreements and related matters, including non-competition issues. Using my many years of experience and backed by a firm of legal specialists in nearly every legal field, I can help you or your company evaluate your situation and help you make smart decisions about your business and your life that will best fit your circumstances.