Section 1542 waiver: Overview, definition, and example
What is a Section 1542 waiver?
A Section 1542 waiver refers to the waiver of a legal right under California Civil Code Section 1542, which is a law designed to protect individuals from waiving unknown claims or rights that they might not be aware of at the time of a settlement or release. Specifically, Section 1542 states that a general release of claims does not extend to claims that the person giving the release does not know about or suspect to exist at the time of signing. A Section 1542 waiver means that the party signing the release acknowledges and voluntarily waives this protection, agreeing to release not only known claims but also unknown claims.
For example, a person who is settling a lawsuit might sign a release that includes a Section 1542 waiver, agreeing to release both known and unknown claims related to the dispute.
Why is a Section 1542 waiver important?
A Section 1542 waiver is important because it allows parties to settle disputes fully and finally, including all potential claims that could arise in the future. Without such a waiver, even after a settlement is reached, one party could potentially bring a future claim related to matters they were unaware of at the time of settlement. The waiver gives the party waiving their claims certainty that no additional legal actions will arise from the same situation, providing a clean break and finality.
For businesses and individuals, the waiver is especially important in settlement agreements and other legal releases because it helps reduce the potential for future litigation. It ensures that the resolution of a matter is final, including any hidden or unknown issues at the time of settlement.
Understanding Section 1542 waiver through an example
Imagine that a company and an employee reach a settlement over a wrongful termination claim. The employee signs a settlement agreement that includes a Section 1542 waiver, acknowledging that they are releasing not just the claims they are currently aware of (such as issues related to their termination) but also any potential claims they may be unaware of at the time (such as future claims related to other actions the company may have taken). By signing this waiver, the employee agrees to fully and finally resolve the matter, with no possibility of bringing any new claims in the future.
In another example, a business owner settles a dispute with a supplier over a contract breach. The settlement agreement includes a Section 1542 waiver, meaning the supplier agrees to release all claims, both known and unknown, related to the business relationship. This prevents the supplier from later bringing a claim about something they did not realize was an issue during the time of settlement.
An example of a Section 1542 waiver clause
Here’s how a Section 1542 waiver clause might appear in a settlement agreement:
“The Parties agree to release and discharge each other from any and all claims, demands, causes of action, or liabilities, whether known or unknown, arising out of or related to the matters discussed herein. The Parties further acknowledge that they have read and understand California Civil Code Section 1542 and voluntarily waive any rights provided by such Section, including the right to assert any claims or causes of action they are unaware of at the time of this release.”
Conclusion
A Section 1542 waiver is a key legal tool in settlements and releases, allowing parties to fully and finally resolve disputes by waiving not only known claims but also any unknown claims that could arise in the future. By waiving the protections offered under California Civil Code Section 1542, parties gain certainty and finality in the resolution of their legal matters. This waiver is especially important in business and legal contexts to prevent future litigation and ensure a clean, final settlement. Understanding and using a Section 1542 waiver can provide both parties with confidence that all potential claims, whether known or unknown, are addressed and settled.
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.