Amendment and waiver: Overview, definition and example
What are amendment and waiver?
Amendment and waiver are two legal concepts that are commonly included in contracts to provide flexibility and address changes in the agreement or the rights of the parties involved.
- Amendment refers to the process of making changes or modifications to the terms of a contract after it has been executed. Amendments can be made to update or adjust specific provisions of the agreement to reflect new circumstances or mutual agreements between the parties.
- Waiver refers to the voluntary relinquishment or surrender of a right or claim. In a contract, a waiver clause specifies that a party may waive or give up certain rights or claims, typically related to the enforcement of the terms or performance of obligations.
For example, if one party breaches a contract, the other party may choose to waive their right to enforce the penalty clause, effectively forgiving the breach.
Why are amendment and waiver important?
Amendment and waiver clauses are important because they provide flexibility to the parties involved in a contract. They allow the parties to modify the agreement as needed, without having to void the entire contract and create a new one. These clauses also help manage situations where one party may choose to forgo enforcing a provision, either due to a minor breach or to maintain a cooperative relationship.
Including these clauses helps avoid disputes over contract modifications and clarifies that any changes or waivers must be documented and agreed upon in writing.
Understanding amendment and waiver through an example
A software company and a client enter into a service agreement with a term of one year. Midway through the agreement, the client requests a change in the scope of the services provided, which requires an amendment to the contract. Both parties agree to the new scope, and the agreement is amended in writing. Additionally, if the client delays a payment by a few days but the software company decides not to enforce the penalty, the company may choose to waive that right.
An example of an amendment and waiver clause
Here’s how an amendment and waiver clause might appear in a contract:
“This Agreement may be amended, modified, or supplemented only by a written agreement signed by both Parties. No waiver of any provision of this Agreement shall be effective unless in writing and signed by the Party waiving its right. A waiver of any breach or default shall not be deemed a waiver of any subsequent breach or default.”
Conclusion
Amendment and waiver clauses are essential for providing flexibility and managing the ongoing relationship between parties in a contract. An amendment allows the contract to evolve based on changing circumstances, while a waiver provides a way to forgive or relinquish certain rights without terminating the agreement. Clearly defining how amendments and waivers are to be handled ensures that the contract can adapt over time while protecting the interests of both parties.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.