Waiver clause: Overview, definition, and example
What is a waiver clause?
A waiver clause is a provision in a contract that allows one party to voluntarily give up or relinquish a right or claim. It typically states that if a party does not enforce or exercise a right or remedy within a specific timeframe, or in certain situations, it will not be interpreted as a waiver of that right in the future. Waiver clauses are commonly used to protect parties from unintentionally losing their rights by not taking immediate action.
For example, a waiver clause might be included in a lease agreement, specifying that if the landlord does not immediately address a tenant’s complaint about a maintenance issue, it doesn’t mean they waive their right to enforce repairs later.
Why is a waiver clause important?
A waiver clause is important because it provides clarity and protection for parties in a contract. Without such a clause, a party may unintentionally forfeit its rights or remedies if it delays in taking action. Waiver clauses help ensure that a party does not lose the ability to assert a right simply because it has not been exercised right away or in a specific instance. This can prevent misunderstandings and legal disputes over the enforcement of contract terms.
For businesses, including a waiver clause in contracts can help avoid the unintended loss of rights due to inaction or delays, providing more flexibility in how rights are managed over time.
Understanding a waiver clause through an example
Imagine a supplier and a retailer enter into a contract where the supplier agrees to deliver goods on a specific date. The contract includes a waiver clause stating that if the retailer does not immediately reject goods that do not meet the quality standards, the supplier will not be considered to have waived its responsibility to provide quality goods in future transactions. Even if the retailer does not address the issue right away, the supplier is still required to deliver quality goods in subsequent shipments.
In another example, a business might have a contract with a customer that includes a waiver clause for late payment penalties. If the business does not impose a penalty on the customer for one late payment, it does not mean they waive the right to charge penalties for future late payments.
An example of a waiver clause
Here’s how a waiver clause might look in a contract:
"No waiver of any breach or default under this Agreement shall be deemed to be a waiver of any preceding or subsequent breach or default. The failure of any party to enforce any provision of this Agreement shall not be construed as a waiver of that provision or of any other provision of this Agreement."
Conclusion
A waiver clause is a protective provision that prevents the unintended loss of rights in a contract. It ensures that the failure to act or enforce a right in one instance does not mean that right is waived in the future. For businesses, incorporating a waiver clause into contracts helps maintain flexibility and protects against the unintentional forfeiture of legal rights.
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.