Waiver – an important legal principle explained

What does waiver mean in contract law? Waiver can be defined as a voluntary relinquishment of legal rights that a person or organisation would normally have if the waiver did not exists.  Although waiver is commonly referred to in contract law and particularly is a concept often related to breach of contract, it is a

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 If you need a formal contractual waiver drafted, we can assist with this and can also advise if you are confused or concerned about whether action or inaction might lead to a court finding that there has been a waiver of a breach of contract. This is a common situation where the implications of getting things wrong can be considerable and problems can be headed off if you get good advice and/or a letter written at the right time protecting your interests. 

What does waiver mean in contract law?

Waiver can be defined as a voluntary relinquishment of legal rights that a person or organisation would normally have if the waiver did not exists.  Although waiver is commonly referred to in contract law and particularly is a concept often related to breach of contract, it is a broad term which is applicable in other areas of law too.

What are some examples of waiver?

There are many.  In the context of contract law, typical examples of waiver might include losing the right to insist on goods that are exactly as described; losing the right to see a particular set of terms enforced in a contract; receiving payment in a form that was different to the form originally intended i.e. cheque instead of credit card.

How does a waiver come into existence?

For a waiver to come into existence, the person who forfeits legal rights must do so in an informed way, without duress and through words (verbal and written) or through conduct implying a waiver has come into existence.

What is waiver by election?

Waiver by election occurs where a person or organisation makes a choice between several rights (for example, choice of remedies) and communicates that choice through their conduct or words.  The conduct and words must be of such a nature that it is unequivocal that the party has chosen to exercise one right and abandon another.

What are waiver clauses?

Whether an action or inaction constitutes a waiver often creates uncertainty, especially where the waiver comes into existence by spoken word or even conduct.  To overcome this drawback, waiver clauses can be inserted into contracts to govern the way in which waiver works.  In fixed-term employment contracts, for example, some employers may try to insert waiver clauses to prevent employees claiming unfair dismissal if their contract is not renewed.  However, such clauses may only be valid where the contract of employment is for one year or longer.

What is the difference between waiver and variation?

Waiver does not actually vary the terms of a contract whereas variation does.  Variation, however, requires a much more formal approach than waiver – all the usual rules of forming a valid contract need to be followed, that is an offer to vary terms, acceptance of the offer, consideration (a legal term, but will usually be in the form of money) and intention of both parties for the variation to be legally binding.

What is the difference between waiver and estoppel?

In estoppel, one party represents to the other that it will not exercise certain legal rights.  The party that is represented to relies on this being the case.  The key differences are in the concepts of reliance and detriment.  In waiver, one party does not have to rely on a waiver by the other and suffer if the other party does not do as they said.  In estoppel, one party relies on the representation and the party making the representation is ‘estopped’ (prevented) from going back on their word because this would cause ‘detriment’ to the other party.

bjone-sbFor further guidance and/or advice please do get in touch with me.

commercial law

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