Exculpatory Clauses and Civil Code Section 1668: What a Contract Cannot Excuse in California

Last updated: November 2026. Reviewed by Pavel Kolmogorov, California business litigation attorney (State Bar No. 321018).

An exculpatory clause is a contract term that excuses one side from liability for its own conduct, and in California it cannot excuse a lie. The law declares against its policy every contract whose object is to exempt anyone from responsibility for his own fraud, willful injury to the person or property of another, or violation of law. (Civ. Code, § 1668.) The same clause may still defeat a claim for ordinary negligence. Kolmogorov Law, P.C. litigates these clauses for businesses relying on them or facing them.

Call (909) 235-6116 or contact us online to discuss a clause that says one side is not liable, and whether it will hold.

What an exculpatory clause is

The clause goes by several names: release, waiver, disclaimer, hold harmless. "In no event shall the vendor be liable for any loss." "Sold as is, and buyer has relied on no statement not written here." What they share is the aim. One party is excused in advance from answering for something it may do.

Three neighbors differ from it. A cap limits how much can be recovered, a subject covered on our page about limitation of liability clauses. An indemnification clause ordinarily shifts the cost of claims brought by outsiders. A release signed to settle a dispute gives up claims that already exist.

What section 1668 forbids

The statute is one sentence. All contracts that have for their object, directly or indirectly, to exempt anyone from responsibility for three things are against the policy of the law. The three are his own fraud, willful injury to the person or property of another, and violation of law, whether willful or negligent. (Civ. Code, § 1668.)

"Directly or indirectly" reaches clauses that do not use the word release. In the case discussed below, an integration clause and an advisory to investigate were treated as exculpatory clauses.

"Whether willful or negligent" attaches to violation of law. A clause cannot excuse breaking a statute merely because the violation was careless. How far the phrase "violation of law" extends across every statute and regulation is not fully settled, so the statute involved needs a close reading.

Fraud: the clause does not protect a lie

A vendor that induced the contract by a knowing false statement cannot use the contract to escape the consequences.

The Court of Appeal applied the rule to standard form clauses. Buyers of land alleged that the sellers' brokers falsely told them the parcel could be split. The contract had an integration clause, an advisory telling the buyers to investigate land use themselves, a disclaimer by the brokers, and a handwritten term that the buyers would satisfy themselves about use. The trial court held that those clauses made reliance unjustified as a matter of law. The appellate court reversed. It called it well established that section 1668 precludes a party from contracting away liability for fraud or deceit based on intentional misrepresentation. (Manderville v. PCG&S Group, Inc. (2007) 146 Cal.App.4th 1486.)

That decision has two limits. The court was dealing with intentional misrepresentation, and it left the negligent misrepresentation claim undecided. It also distinguished a contract that obligates the buyer to investigate. The buyers there had a right to investigate, not a duty.

Our pages on fraudulent inducement and negligent misrepresentation cover what each claim requires.

Ordinary negligence: the public interest test

Carelessness that breaks no statute is treated differently. The California Supreme Court held long ago that a clause excusing a party from its own future negligence is invalid when the transaction affects the public interest. (Tunkl v. Regents of University of California (1963) 60 Cal.2d 92.)

The court listed the marks of such a transaction. The business is of a type thought suitable for public regulation. It performs a service of great importance to the public, often a practical necessity. It offers that service to any member of the public. It holds a decisive advantage in bargaining strength and uses a standardized adhesion contract, with no option to pay more for protection against negligence. And the customer's person or property is placed under its control. A contract need show only some of these. (Id. at pp. 98-101.)

The court added that no public policy opposes a private, voluntary transaction in which one party, for a consideration, agrees to shoulder a risk the law would otherwise place on the other. (Id. at p. 101.) A negotiated allocation of negligence risk between two companies can fit that description.

In a case about a recreational program, the Supreme Court held that an agreement releasing liability for future gross negligence is generally unenforceable as a matter of public policy. Our limitation of liability page discusses how that rule bears on commercial contracts.

Breach of contract, and what survives when part of a clause fails

Section 1668 is aimed at fraud, willful injury, and violations of law. A clause limiting liability for a plain breach of contract is tested under ordinary contract rules, chiefly unconscionability.

A clause written too broadly may be refused only as applied to the forbidden claim. Our page on severability clauses explains how courts decide.

If your business faces the clause

Sort your claims by type. A claim for breach of contract or ordinary negligence may be inside the clause. A claim for fraud, intentional harm, or violation of a statute may be outside it.

Then test the facts honestly. The other side will argue that a fraud count is a contract claim under another name. We read the contract and the pre-signing statements together, because a fraudulent inducement claim rests on what was said before the signature.

If your business relies on the clause

Plead the clause as a defense and raise it at the first opportunity. Expect a fraud or statutory count, and be ready to show that it rests on the same facts as the contract claim. Evidence that the term was negotiated, priced, and understood helps on both the negligence question and unconscionability.

What to bring to the first meeting

The signed contract with every exhibit, and drafts showing whether the clause was negotiated.
Proposals, emails, and sales materials containing statements made before signing.
A description of the loss and of what the other side did or failed to do.
Any statute, license requirement, or regulation you believe was violated.

Frequently asked questions

Our contract says the vendor is not liable for anything. Does that hold up in California if the vendor lied to us?

Not as to the lie. California Civil Code section 1668 makes a contract term unenforceable to the extent its object is to exempt a party from responsibility for its own fraud. If the vendor knowingly misstated a fact to get your signature, the clause does not bar a fraud claim. It may still limit claims for poor performance.

What is an exculpatory clause?

An exculpatory clause is a contract term that relieves one party of liability for its own future conduct. Examples are a waiver, a release of future claims, or a statement that the party is not liable for any loss. In California its reach is limited by Civil Code section 1668 and by the public interest test for negligence.

What does Civil Code 1668 prohibit?

It declares against the policy of the law any contract whose object is to exempt a person from responsibility for that person's own fraud, willful injury to another's person or property, or violation of law, whether willful or negligent. The California statute applies whether the exemption is direct or indirect. It does not, by itself, bar limits on liability for breach of contract.

Can a contract waive liability for negligence in California?

It can. California allows a party to be excused from its own future ordinary negligence unless the transaction affects the public interest, a test the state Supreme Court set out in 1963. The court said no public policy opposes a private, voluntary deal in which one party agrees, for a consideration, to bear that risk. The answer may differ for gross negligence and for negligence that violates a statute.

We signed a contract with an as-is clause and a statement that we relied on no promises. Can we still sue for fraud?

Probably, if you can prove an intentional misrepresentation. A California appellate court held that an integration clause, an advisory to investigate, and a disclaimer could not defeat a fraud claim as a matter of law. Whether your reliance was reasonable is ordinarily a question of fact, and a contract that required you to investigate the point may change the analysis.

Talk to a California breach of contract attorney

If a clause in your contract says one side is not liable and a real loss has occurred, call (909) 235-6116 or contact us online. Kolmogorov Law, P.C. is a business litigation firm in Irvine, California, that represents companies and their owners in court and in arbitration.

This page provides general information about California law and is not legal advice. Outcomes depend on the contract language, the claims pleaded, and the court.