Legal and Risk Management
Principles
Chapter 9
Tort Law
• The Law of Torts is a body of legal principles
that govern “wrongs” done by one individual
and another.
• Tortious acts can be intentional or personal
injury/malpractice or governed by standards
of strict liability or injuries out of the fact for
which there will be absolute liability.
• A tort is an act or omission producing injury to
another.
Liability in Negligence
• Liability in negligence is the failure to do what
a reasonably careful and prudent person
would have done under the same or like
circumstances or the doing of something that
a reasonably careful and prudent person
would not have done under the same or like
circumstances.
Negligent Behavior
• Levels of Negligence
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Malfeasance (commission of unlawful act)
Misfeasance (improper performance of lawful act)
Nonfeasance (failure of the person to act)
Reckless misconduct (intent to commit an act but with
no intention to harm anyone)
– Willful or wanton misconduct (intentional act of an
unreasonable character in total disregard for human
safety)
– Gross negligence (failure to use even slight care)
– Slight negligence (failure to exercise great care)
Standard of Care
Negligence is conduct that fails to conform to
the standard required by law for safeguarding
others or oneself against unreasonable risk of
injury. Common law developed the "reasonable
man (person) test" as the model against which
to evaluate a particular defendant's conduct for
conformity with what is required at any given time
and/or place in order to avoid unnecessary danger.
Components of Negligence
• Damages
• Duty (foreseeability)
• Breach of Duty
• Proximate Cause
Professional Duty
The following are the duties for sport professionals:
• To provide adequate supervision for all participants
• To warn participants of the inherent risks in an activity
• To provide safe facilities for participation
• To evaluate for injury or incapacity prior to participation
• To provide adequate and proper equipment for activities
• To match participants to appropriate activities based on
their age and physical condition
• To provide good, sound planning for all lessons and
programs
• To provide proper first aid and establish and implement an
emergency medical plan
Defenses for Negligence
• Assumption of risk
– Knowledge of risk
– Free and voluntary choice
• Contributory negligence
– “Dirty Hands” concept
• Comparative negligence
– Comparative theory, less harsh approach
• Governmental immunity
– Common-law theory
Supervision
• Supervision is viewed by the courts as an
important and essential legal duty for the sport
management professional.
• Supervision means you are in charge of others as
they perform some activity. As a sport
management professional, it means you are in
charge of your clients and, possibly, other sport
management personnel.
• Supervision means you also have responsibilities
to your clients.
Qualified Supervision
• The duties commonly assigned to a coach or strength
training coach regarding supervision consist of the
following:
– supervise exercise testing and/or exercise
– plan appropriate exercise programs
– present clear warnings of inherent risks within exercise
testing and/or exercise programs
– assist in providing a safe testing and exercise environment
– be able to evaluate injury or incapacity
– properly match participants to appropriate exercise
programs
– administer first aid and CPR and activate the emergency
medical system.
Proper Supervision
When providing in-service training and developing a supervisory plan,
the professional must take into consideration the following aspects:
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what should the supervisor look for
what should the supervisor listen for
where should the supervisor stand
how should the supervisor move around
what should the supervisor do if a problem arises
identify all potential dangerous activities
how close should the supervisor be to the activity
understand the warning signs of impending trouble during an activity
or in a client
– establish a "stop signal" that can be used when the supervisor must
immediately suspend activity
Components for an
Adequate Exercise Plan
There are a few key points to be considered:
– Are your goals realistic and attainable?
– Have you considered aspects such as
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client's medical background,
client's ability level,
client's interest,
client's attitude(s) toward health/fitness/recreation/sport and you, and
your own interest and enthusiasm for the plan?
– Does your plan provide for
• an initial level of difficulty with an appropriate sequence of increasing difficulty,
• did you make allowances for variety in the program, and
• is the program interesting and meaningful for the client?
– Did you consider the following organization and administrative aspects for
implementing the program:
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were your explanations and directions clear and concise,
did the client understand exactly what was expected of him/her,
do you have emergency plans in case of a medical emergency, and
is all equipment ready and in good repair when needed?
Exculpatory Agreement
• An exculpatory agreement is an agreement
signed by a participant in an activity in which the
participant agrees not to hold the people in
charge of the activity responsible for any injury
that might result from participation in the
activity.
• The common types of exculpatory agreements
are
– waivers and
– informed consent.
Waiver
• A waiver is a form of an exculpatory of fault-free
agreement between parties.
• The purpose of an exculpatory clause is to relieve one
part of all, or a part of, its responsibility to another.
• It is considered a contract and, as such, is in conflict
with the fundamental principle of negligence law that
states that one should be responsible for negligent acts
that cause injury to others.
– Contract law states that all persons with contractual
capacity should have the freedom to contract as they wish;
therefore, a professional should not rely too heavily on
these waivers for protection for a number of reasons.
Value of the Exculpatory Clause
There are a number of factors that make the value of an
exculpatory clause questionable or even nonexistent. They are
as follows:
– a strong public policy that prohibits such a clause
– one party being in a clearly dominant position, such as an employer–
employee relationship
– the presence of any fraud or misrepresentation in the clause
– any agreement which is signed under duress
– the clause or the conditions it creates are unreasonable
– the agreement is ambiguous
– the signature for such an agreement does not immediately follow the
agreement
– presence of wanton, intentional, or reckless misconduct
Warning(s)
• A warning is any device that informs one in
advance of impending or possible harm/risk.
Before a person can assume a risk, he/she must
be made aware of that inherent risk.
• The person must be aware that improper,
dangerous techniques, if used, increase the risk
of injury.
• There are three levels of comprehension:
– knowing
– understanding
– appreciating the risk
Warning(s)
• A warning should
– specify the risks presented by the activity or test
– be consistent with the activity or test
– provide a reason for the warning
– attempt to reach foreseeable participants
– be specific and clear so that it creates knowledge,
understanding, and appreciation in the
participant's mind
– be written and explained orally if possible
Warning(s)
An adequate warning is
– conspicuous , so it attracts the user’s eye
– specific, so it is understood by the user
– forceful, so it convinces the user of the range and
magnitude of the potential harm
Warning(s)
When developing a warning the sport management professional needs to take into
consideration the following points:
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Estimate the physiological demands
Request medical certification
Encourage safe performance
Emphasize any major standard warning(s), if present
Highlight any major unique inherent risk(s)
Underscore other common risks ranging from major to minor and frequent to rare
Explain any inherent safety rule(s)/protocol(s)
Clarify equipment recommendations and use
Describe necessary etiquette
Solicit and encourage questions
Summarize the know, understand, and appreciate statement
Request that the warning statement be signed and dated (Do not require that the form be
signed)
– File the warning statement
Standard of Care
for Facility Participants
The standard is based on whether the
participant is an invitee (i.e., a person who goes
onto another's premises by the specific or implied
invitation of the owner or operator) or a licensee
(i.e., a person who comes on the premises for his
own purposes but with the owner's or operator's
consent) or a trespasser (i.e., a person who
intentionally and without consent or privilege
enters another's property).
Notice
• Notice
• Actual Notice
• Constructive Notice
Safe Facility and Equipment Duties
• Conduct regular and thorough facility and equipment inspections and
record the results in written form and file for future reference
• Maintain current standards for the appropriateness of facility and
equipment for the activities being implemented
• Develop a regular preventive maintenance schedule for the facility and
equipment
• Advise all personnel of the "shared responsibility doctrine" that states that
all parties share in the responsibility for conducting programs safely by
fulfilling their shared responsibilities in a manner that is consistent with
preventative maintenance
• Purchase the best equipment affordable for the activity that meets league
or conference requirements
• Be aware of changes in equipment and standards of safety relating to
equipment
• Take care when adjusting, fitting, or repairing equipment
• Be wary of new untested equipment
Safe Facility and Equipment Duties
• Avoid "illegal" equipment
• Present necessary warnings for equipment as specified
by the manufacturer
• Avoid "home-made" equipment
• Teach proper technique for using equipment
• Avoid hand-me-downs
• Be certain insurance reflects the current status of
equipment
• Include equipment in sport center's safety program
• If equipment is not used, keep it inaccessible
• Equipment is used for intended purposes only
Pitfalls to Avoid With the ADA
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Each person must be treated as an individual and must not be treated based upon some
general stereotype or concept concerning type of apparent disability.
An employer cannot avoid responsibility by contracting or otherwise having a third party
provide a service. (For example, if an employer contracts with a health club to supervise and
operate a health/fitness/recreation/sport program, the same restrictions apply against the
employer, and the employer may well be held liable for any actions by the
health/fitness/recreation/sport club in violation of the ADA).
A disabled person does not need to prove intentional discrimination. An honest,
unintentional mistake that is discriminatory and prohibited by the ADA can result in sanctions
provided by the law.
The ADA generally prohibits preemployment medical examinations as well as questions about
disabilities but specifically permits voluntary medical examinations in wellness programs.
Any information gathered through voluntary medical examinations must be confidential and
the medical examination requirements must apply to all employees.
The ADA does not supersede or preempt any other federal or state law. Therefore, it is
theoretically possible for an employer to subject itself to liability under another law or laws.
The greatest pitfall of all would be to do nothing.
Contract
• An agreement (or promise) between two or
more persons that creates an obligation to do
or not to do a particular action. A contract is a
promise or set of promises for the breach of
which the law gives a remedy or the
performance of which the law in some way
recognizes as a duty.
Contract
• Components:
– Offer
– Acceptance of offer
– Consideration
– Legality
– Capacity
Offer
• An offer is a conditional promise made by the
party offering (offeror) to the party accepting
(offeree). Most often, an offer is in writing
outlining a few essential bits of information
including, but not limited to (a) the involved
parties names, addresses, and phone
numbers; (b) the subject matter; (c) the time,
day, and place for the subject matter to be
performed; and (d) the agreed upon price to
be paid.
Acceptance
• The only person who can accept an offer is the
party (offeree) it was offered to by the offeror.
No one else can accept the offer made unless
the offer was made to more than one party. In
that case, all parties involved must accept the
offer.
Consideration
• Consideration involves an exchange of value
wherein one party agrees through a
bargaining process to give up or do something
in return for another party doing the same.
The courts most often view consideration as
the glue in the agreement. Consideration
makes the contract legally enforceable.
Without consideration, there may be a
promise to do something, but it may not be
legally enforceable as a contract in court.
Legality
• Legality means that the underlying bargain of
the contract is for a legal action(s). The courts
will not enforce contracts for illegal actions
such as prostitution, gambling, drug deals,
loan sharks, and so forth.
Capacity
• Capacity is the ability to comprehend the
nature and effects of one's acts. Generally
speaking, anyone who has reached the age of
18 (sometimes referred to as the age of
majority in many states) has the capacity to
enter into a contract. There are conditions
that invalidate a contract including
intoxication, mental incompetence, fraud, and
illegal acts.
Discharging a Contract
• A contract is usually discharged by the performance of the
terms of the agreement, but termination may also occur by
later agreement, impossibility of performance, operation of
law, or acceptance of breach. Contracts are commonly
discharged by performance.
• A contract discharged by performance includes when (a)
payment is required by the contract, performance consists
of the payment of money or, if accepted by the other party,
the delivery of property or the rendering of services; (b) the
date or period of time (time of performance) for
performance is stipulated, performance should be made on
that date or in that time period; and (c) a tender (an offer
to perform is a tender) has been completed or refused.
What Makes a Contract Void?
• An offer gives the offeree power to bind the
offeror by contract. This power does not last
forever and the law specifies that under certain
circumstances the power shall be terminated.
Offers may be terminated in any of the following
ways: (a) revocation (offeror revokes the offer
before it is accepted), (b) counteroffer by offeree,
(c) rejection of offer by offeree, (d) lapse of time,
(e) death or disability of either party, and (f)
subsequent illegality.
What is a lease?
• A lease exists whenever one person holds possession of the
real property of another under an express or implied
agreement.
• The essential elements of a lease include (a) the occupying
of the land or property must be with the express or implied
consent of the landlord, (b) the tenant must occupy the
premises in subordination to the rights of the landlord, (c) a
reversionary interest in the land must remain with the
landlord (i.e., the landlord must be entitled to retake
possession of the land upon the expiration of the lease),
and (d) the tenant must have an estate of present
possession in the land (i.e., must have a right that entitles
him to be in possession of the land now).
Common Contracts in Sports
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Merchandise
Services
Concessions
Game contract
Officials contract
Broadcast contract
Organization agreements
Facility agreements
Independent Contractor
• An independent contractor is one who renders service in the course
of an occupation representing the will of his employer only as to
the result of the work. Independent contractors include attorneys,
concessionaires, dance exercise instructors, physicians, professional
trainers, sport officials, and companies (e.g., insurance companies,
custodial service companies, fitness equipment maintenance
companies). The general rule, relating to independent contractors,
has been that liability can be shifted from the employer to the
independent contractor. However, the employer must exercise
reasonable care to select a competent, experienced, certified, and
careful contractor with proper equipment who follows appropriate
safety precautions to protect employees and the invited public.
Reasons for Increased Litigation
• There are generally three reasons for the increase
in litigation: (a) sport is a reflection of society, and
we have resorted to the courts system as a means
of resolving our disputes; (b) when the stakes are
higher, people and sport organizations are more
willing to pursue litigation; and (c) sport
organizations are being run as businesses, and
wherever business is involved, people are aware
of their rights and consequently will protect
those rights in a court of law.
Risk Management
• Risk management is a total program that analyzes
where and why accidents occur and how the
hazards might be controlled. At the same time, a
good program will determine which calculated
risks are acceptable. A risk management program
is a proactive approach to establishing safe
activities, facilities, and equipment. Once the
program is established, it should prevent most
accidents. However, if an accident should occur
and a lawsuit is initiated, the risk management
program will be evidence of having acted
responsibly.
Risk Management Consists of …
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Program feasibility
Risk identification
Risk treatment
Risk implementation
Risk evaluation
Committee Tasks
The committee needs to complete the
following tasks: (a) develop a philosophy and
policy statement, (b) complete a needs
assessment identifying the strengths and
weaknesses of the organization, and (c)
establish objectives that are Specific,
Measurable, Attainable, Realistic, and Time
framed (SMART).
Aspects of Program and
Facility Management
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The risk management committee
should be concerned with the
following aspects of program and
facility management:
site and facility development
program development
supervision
personnel policies
testing procedures
establishment of rules, regulations,
and procedures
facility and equipment inspection
procedures
facility and equipment
maintenance procedures
accident reporting and analysis
(10) first aid and emergency procedures
(11) releases, waivers, agreements to
participate
(12) methods of insuring against risk
(13) in-service training
(14) public relations
(15) contract procedures
(16) outside specialists,
legal/insurance/CPA/Medical
(17) signage
(18) risk management audit
(19) periodic review
Benefits of Risk Management
A risk management program is valuable in the event of
legal action against any organization. A strong risk
management program shows intent. A risk management
program serves as a deterrent to being sued and, if sued, as
evidence of intent to act as a reasonable and prudent
person. Other benefits include (a) increased safety for the
customers, (b) reduced losses to the organization, (c) more
effective use of available funds, (d) identification of
exposure you can cover through an alternative to
insurance, (e) increased attractiveness of the organization
to insurance companies, (f) reduced uncertainties
associated with future projects, and (g) easier monitoring
of claims, losses, and insurance coverage.
Risk Treatment
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Once a risk has been identified, it can be treated one
of four ways:
Avoid [A] - making a conscious decision not to accept the
specific risk present at that time and, therefore, not run the
program.
Transfer [T] - informing participants of high-risk activity
situations and having them assume the risk of participation
and seeking appropriate liability insurance coverage.
Reduce/Modify [M] - the use of additional safety
equipment and/or procedures that are designed to reduce
potential accidents.
Retain [R] - intentional continuation of the program with
planned consideration of the risk.
Insurance Coverage Areas
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The risk management program manager should be prepared to cover four main areas of possible liability: (1) building and
premises, (2) motor vehicles, (3) activities (i.e., from incidents due to the nature of the activity engaged in), and (4) employee conduct
(i.e., out of actions of employees).
Here is where the legal and insurance consultants can be very helpful to the risk management program manager. The risk
program manager should become familiar with some basic insurance "jargon" before trying to engage an insurance consultant.
Furthermore, the risk program manager should know what insurance the organization currently has and its limits. A survey of
companies specializing in this type of insurance shows a wide variety of coverage available including the following:
Professional teams, athletes, and events - liability and accident medical coverage, high-limit accidental death and disability insurance,
contractual bonus and performance incentive programs
For amateur athletes and events (e.g., Olympic Festivals, USOC, National Governing Bodies, Pan American Games, World Games)
For college and high school teams, athletes, athletic associations, club/recreational sport activities, sports camps, facilities - sports
liability and accident medical coverage, disability insurance, play-practice coverage, transportation insurance, catastrophic injury
coverage
For your youth/adult recreational teams and leagues - liability and accident coverage
For health clubs, fitness centers, and sports clubs - property, accident, and liability insurance for participants/members and staff, day
care facilities, tanning beds, diving boards, whirlpools, weight rooms, trampolines, food and liquor services
For venues (stadiums, arenas, recreational facilities, water parks) - spectator and participant liability, property insurance, casualty
insurance
For promotions and special events - event cancellation, sponsorship/prize guarantee, special events liability, weather and nonappearance insurance
For general public liability - products liability, watercraft liability, saddle animal liability, liquor liability, personal injury liability,
independent contractor's liability, advertisers’ liability, and adventure and tripping program liability
For employees, directors, and officers - liability coverage
For vehicles - bodily injury liability, property damage liability, business auto policy, user of other autos, employers non-owned and hired
autos, camp bus coverage, medical payments, comprehensive, and collision insurance
For protection of finances and operations - loss of income, discrimination or civil liberties violations, advertising liability, or contractual
liability by endorsement (hold harm less agreement or indemnification)
Insurance Checklist
In the following checklist are recommendations for managers, instructors, coaches, volunteers,
and staff when securing insurance:
1. Never assume you are covered. Always check your insurance coverage.
2. Check your insurance policy at least twice a year for changes and to be sure you still have
adequate coverage.
3. File a report on an incident as soon as it happens and submit a proper claim to the insurance
company.
4. Anyone involved in an activity outside their job's jurisdiction or areas of control may seek to
secure more personal liability coverage.
5. Be aware of potential hazards and report them to the necessary people or group.
6. Secure a short-term group accident policy to cover special activities when risk is foreseeable.
7. Analyze the liability aspects of your program or area and ensure adequate coverage in these
areas.
8. Have release forms. They may solve small liability problems that the participants
acknowledge the risk they are assuming and their voluntary participation in the program, but
do not rely on them to solve any negligent actions.
9. Have participants in events obtain medical releases and pre-participation physicals.
Insurance Companies’ Concerns
What do insurance companies consider before
determining if a facility or event is insurable?
The insurer reviews information regarding five
basic areas: (a) security, (b) maintenance and
housekeeping, (c) emergency services, (d)
parking and traffic control, and (e)
concessions. The company is concerned as to
how these areas are managed. Premiums are
based on how these areas are managed.