As parties increasingly seek to limit liability through contractual disclaimers, the Oregon Supreme Court has issued a clear reminder: tort waivers must be stated in unmistakable terms to be enforceable. Courts will not infer a waiver from context or implication alone.
In Certain Underwriters at Lloyd’s London v. TNA NA Manufacturing, Inc., 372 Or. 64 (2024), the Oregon Supreme Court reversed two lower court decisions that had found liability disclaimers in a purchase contract sufficient to waive tort claims. The case arose from a subrogation action following a $20 million loss suffered by a food manufacturer due to a listeria outbreak linked to processing equipment purchased from a distributor. The manufacturer’s insurer paid the claim and pursued subrogation against both the distributor and the equipment manufacturer.
Oregon law strongly disfavors contractual waivers of tort liability—especially for a party’s own negligence. In Waterway Terminals v. P.S. Lord, the court emphasized that such waivers must be “clearly and unequivocally” stated. 242 Or. 1, 19 (1965). Courts consider both the contract language and the potential for harsh or inequitable outcomes that might result from immunizing a party from its own negligence Estey v. MacKenzie Engineering Inc., 324 Or. 372, 376 (1996). This “heavy burden” requires that the contract language put the waiver “beyond doubt” Southern Pac. Co. v. Layman, 173 Or. 275, 281 (1944). The waiver must explicitly absolve the other party from liability for negligence and product defects.
Despite this precedent, the trial court found that four liability disclaimers in the purchase contract—when read together—were sufficient to waive tort liability and dismissed the tort claims at summary judgment. These provisions included:
- Section 5 – Warranties: Limited to manufacturing defects and excluded consequential damages.
- Section 7 – Materials and Workmanship: Provided indemnity for damages from faulty installation or negligent operation.
- Section 11 – Disclaimers: Broadly disclaimed liability for various damages but did not explicitly mention tort or negligence.
- Section 12 – Default, Damages, and Remedies: Limited liability to contract remedies and excluded consequential damages.
The Court of Appeals affirmed the trial court’s decision on narrower grounds, concluding that Section 11’s general disclaimers—when viewed in context—constituted a waiver of tort liability because they implicated “liability beyond that arising under the contract.” Certain Underwriters at Lloyd’s London v. TNA NA Manufacturing, Inc., 323 Or App 447, 454 (2022).
Section 11 stated, in part: “Seller shall not be liable, in any event, for loss of profits, incidental or consequential damages or failure of the equipment to comply with any federal, state or local laws…”
However, the Oregon Supreme Court disagreed. It held that broad or generic disclaimers—such as “any liability” or “in any event”—do not meet the “clear and unequivocal” standard required to waive tort claims. The Court emphasized that Section 11’s language referred to damages other than those arising from the seller’s own negligence and did not explicitly waive tort liability.
The Court also noted that references to compliance with “federal, state, or local laws” are common in commercial contracts and may relate to implied warranties of fitness for a particular purpose, so an inferring that language included a waiver of tort liability was improper. See, Millenkamp v. Davisco Foods Int’l, Inc., 562 F.3d 971, 977 (9th Cir. 2009).
When evaluating subrogation potential under Oregon law—or similar jurisdictions—do not assume that liability disclaimers equate to enforceable tort waivers. The waiver must be explicit, unmistakable, and directly address negligence or tort liability. Legal counsel should be consulted to assess the enforceability of such provisions before proceeding with subrogation claims.
