Assignment. On August 8, 1978, the plaintiff, Shirley Petry, entered into a contract with the defendant, Cosmopolitan Spa International, Inc The contract was for a spa membership that was to include "processing, program counseling, and facilities

Question

usage." The written contract contained an exculpatory clause. The pertinent part of the clause stated, "Member fully understands and agrees that in participating in one or more of the courses, or using the facilities maintained by Cosmopolitan, there is the possibility of accidental or other physical injury. Member further agrees to assume the risk of such injury and further agrees to indemnify Cosmopolitan from any and all liability to Cosmopolitan by either the Member or third party as the result of the use by the Member of the facilities and instructions as offered by Cosmopolitan." On or around January 1, 1980, Cosmopolitan sold the spa to Holiday Spa of Tennessee, Inc On February 25, 1980, the plaintiff, Shirley Petry, injured her back when she sat on an exercise machine and it collapsed under her. She brought suit against both Cosmopolitan and Holiday for damages for personal injuries resulting from the defendants' negligence in properly maintaining the exercise machine. The defendants claimed that the exculpatory clause negated their liability. Petry argued that Holiday could not use the excul-patory clause as a defense because it was part of a contract for personal services, and therefore the contract was not assignable. What will the court decide? Discuss fully.

Answer 1

Assignment
The appellate court held that the exculpatory clause was clearly enforceable and that the contract was assignable to Holiday. Thus the summary judgment granted by the trial court was proper. The court relied on an earlier decision of the Supreme Court of Tennessee that upheld an exculpatory clause almost exactly like the one in this case. In regard to Petry's claim that the contract was unassignable, the court stated that contract rights can be assigned unless the assignment (a) would "materially change the duty of the obligor, or materially increase the burden of risk imposed on him by the contract, or materially impair his chance of obtaining return performance, or reduce its value to him," or (b) is illegal or against public policy, or (c) is precluded by contract. The court found none of these exceptions to be applicable. Further, the court disagreed with Petry's claim that the contract was of a personal nature; rather, the con-tract was primarily for the use of spa facilities.