Waiver of unknown claims: Overview, definition, and example
What is a waiver of unknown claims?
A waiver of unknown claims refers to a provision in a legal agreement where one party agrees to waive any future claims or legal rights against another party that have not yet been discovered or are not known at the time of the agreement. Essentially, this waiver prevents the party from bringing lawsuits or making claims later on for issues that were unknown or could not be reasonably known at the time of the agreement.
In many cases, this waiver is included in settlement agreements, releases, or other contracts to protect parties from future legal disputes over matters that may arise after the agreement is executed. It’s often used in the context of resolving disputes, where one party agrees to release the other from liability for any claims, whether known or unknown, in exchange for a settlement or other benefits.
Why is a waiver of unknown claims important?
A waiver of unknown claims is important because it helps to fully resolve disputes or claims at the time of settlement, without leaving the door open for future legal actions related to the same issue. For businesses or individuals, this clause provides certainty by ensuring that once a settlement or agreement is reached, no additional claims will arise later that could disrupt the finality of the agreement or settlement.
For parties agreeing to a settlement, the waiver of unknown claims can prevent future lawsuits, which might otherwise arise if new issues come to light after the settlement. It also helps avoid prolonged or additional litigation costs. On the other hand, it is important for the party waiving such claims to understand the potential risks of releasing unknown claims, especially if future issues arise that could have been addressed at the time.
Understanding waiver of unknown claims through an example
Imagine a business, ABC Corp., that is involved in a dispute with a supplier over a contract. After negotiating a settlement, ABC Corp. agrees to pay the supplier a sum of money in exchange for the supplier’s agreement not to pursue further claims related to the contract. As part of the settlement agreement, the supplier signs a waiver of unknown claims, meaning that the supplier agrees not to bring any future claims against ABC Corp. related to the contract, even if new issues or facts come to light after the settlement.
In another example, an employee might sign a waiver of unknown claims when agreeing to a severance package after leaving a company. By signing the waiver, the employee agrees not to bring any future legal claims against the employer for any issues related to their employment, even if those issues were not known at the time of the agreement.
An example of a waiver of unknown claims clause
Here’s how a waiver of unknown claims clause might appear in a settlement agreement:
“The Releasor hereby fully and irrevocably waives and releases the Releasee from any and all known and unknown claims, demands, or causes of action, whether arising out of or related to the events described in this Agreement. The Releasor acknowledges that this waiver includes claims that are presently unknown, unforeseen, or that could have been discovered with reasonable diligence, and agrees not to pursue any such claims in the future.”
Conclusion
A waiver of unknown claims is a key provision in many legal agreements, particularly settlements and releases. It ensures that once an agreement is reached, no future claims related to the same matter can be brought, even if they are based on information or circumstances that were not known at the time. While this clause helps provide finality and prevent future disputes, it is important for parties involved to fully understand the implications of waiving unknown claims, as it limits their ability to bring legal actions on issues that may arise in the future.
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.