Waiver of breach: Overview, definition, and example
What is a waiver of breach?
A waiver of breach refers to the voluntary relinquishment of a party's right to enforce a breach of contract or claim damages for a violation of the agreement. When one party waives a breach, they choose not to take legal action or hold the other party accountable for failing to meet their contractual obligations. The waiver may apply to a specific instance of breach or be part of a broader agreement, and it often indicates that the non-breaching party is willing to continue the relationship or agreement despite the breach.
For example, a supplier may waive a breach of delivery deadlines by a customer if they choose to continue fulfilling orders without taking action for the missed deadline.
Why is a waiver of breach important?
A waiver of breach is important because it offers flexibility in contracts and allows parties to address minor or inadvertent breaches without terminating the entire agreement. It can also help maintain business relationships by showing goodwill and a willingness to overlook certain violations. However, it is essential for the non-breaching party to understand that waiving a breach does not prevent them from enforcing the agreement in the future.
For businesses, including a waiver of breach clause in contracts can prevent the immediate escalation of disputes and provide an opportunity for negotiation or rectification before pursuing more drastic actions.
Understanding waiver of breach through an example
Imagine a software provider delivers a product to a client, but the product is slightly delayed beyond the agreed delivery date. The client decides to waive the breach by allowing the provider to continue providing the product without penalty or legal action. This waiver means the client will not enforce the penalty clause for late delivery but still expects the provider to meet future deadlines.
In another example, a landlord may waive a breach of a lease agreement by a tenant who has failed to pay rent on time. By waiving the breach, the landlord chooses not to impose late fees or pursue eviction, allowing the tenant an opportunity to make up the payment.
An example of a waiver of breach clause
Here’s how a waiver of breach clause might look in a contract:
“No waiver of any breach of this Agreement shall be deemed a waiver of any subsequent breach, and no failure to enforce any provision of this Agreement shall be construed as a waiver of that provision. Any waiver of a breach must be made in writing and signed by the party granting the waiver.”
Conclusion
A waiver of breach allows parties to forgive or overlook a violation of the contract without terminating or pursuing penalties for the breach. This flexibility can help maintain business relationships and avoid unnecessary disputes over minor infractions.
By including a waiver of breach provision in agreements, businesses can prevent misunderstandings and ensure that they retain the right to enforce the agreement in the future while demonstrating understanding in the face of non-material breaches.
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.