assumption of risk - Business Definition
The American Heritage® Dictionary of Business Terms Copyright © 2010 by Houghton Mifflin Harcourt Publishing Company. Published by Houghton Mifflin Harcourt Publishing Company. All rights reserved.
- Taking responsibility for a potential loss. For example, an individual who decides to forgo collision and comprehensive insurance on a vehicle assumes the risk of a loss from perils covered by these coverages.
- Contracting with another party to assume certain specified risks. For example, an individual may contract with an insurance company that assumes the risk there will be financial loss caused by a fire or strong winds.
assumption of risk - Legal Definition
- In contract law, the act or agreement to take on a risk of damage, injury, or loss, often stated as the risk “passes” to the purchaser upon the occurrence of a certain event, e.g., shipment of goods.
- In contract law, an employee’s express agreement to undertake the risks that normally accompany or arise from that occupation.
- In tort law, that a plaintiff voluntarily accepted or exposed himself to a risk of damage, injury, or loss, after appreciating that the condition or situation was clearly dangerous, and nonetheless made the decision to act; in such cases, the defendant may raise the plaintiff’s knowledge and appreciation of the danger as an affirmative defense. Successful invocation of assumption of risk as an affirmative defense will result in a reduction or elimination of damages assessed against the defendant. This defense has been strictly limited in many states, and is unavailable in certain types of actions, e.g., product liability cases. See also negligence.