Court attempts to eliminate confusion over "contract immunity"
In a rare step back from judicial activism, the Republican majority of Michigan's Supreme Court retreated from the suggestion that signing a contract confers immunity on the signers from any duty to act with reasonable care toward third parties. Lower court judges and defense attorneys had interpreted the language of the Court's 2004 Fultz v. Union-Commerce decision as doing exactly that: granting immunity to the parties to a contract if they caused harm to a third-party. This week, in Loweke v. Ann Arbor Ceiling, six of the seven Justices joined an opinion that rejected such a broad interpretation of Fultz. While the Loweke holding still suggests some ambiguity, it thoroughly repudiates the suggestion that simply signing a contract with someone relieves the signer's duty to exercise reasonable care for other persons. Some of the Justices continue to suggest, however, that the duties created within the contract won't form the basis for a suit by an injured stranger to the contract--even if the duties are performed negligently. The victim must identify a duty of care existing outside the terms of the contract.