Waiver: Overview, definition and example
What is a waiver?
A waiver is when one party in a contract voluntarily gives up a right or claim they have under the agreement. It could involve forgiving a missed deadline, allowing an exception to a rule, or choosing not to enforce a specific term of the contract. Waivers can be either written or implied by actions, but they don’t usually erase the original right permanently unless clearly stated.
For example, if a landlord allows a tenant to pay rent late one month without penalty, that’s a waiver for that specific instance. However, this doesn’t mean the tenant can always pay late unless the waiver explicitly changes the terms of the lease.
Why is a waiver important?
A waiver is important because it provides flexibility in enforcing contract terms. It allows parties to accommodate minor issues or unexpected situations without invalidating the entire agreement. However, waivers can also lead to misunderstandings if not clearly documented. For instance, repeated waivers could unintentionally set a new standard for how a contract is enforced.
For businesses, waivers offer a practical way to maintain relationships by allowing exceptions in good faith while still preserving the overall terms of the contract. A well-drafted waiver clause ensures that waiving one right doesn’t mean waiving all rights in the future.
Understanding a waiver through an example
Imagine a supplier agrees to deliver goods to a retailer every Monday. One week, the supplier misses the delivery, but the retailer chooses not to enforce a late penalty. This is a waiver for that specific missed delivery. However, if the supplier assumes this means late deliveries are acceptable going forward, disputes might arise unless the retailer clarifies that the waiver only applies to the one instance.
In another scenario, a software provider might waive a late payment fee for a customer who’s facing temporary financial challenges. The waiver helps maintain goodwill but doesn’t change the customer’s responsibility to pay on time in the future unless explicitly stated.
An example of a waiver clause
Here’s how a waiver clause might look in a contract:
“The failure of either party to enforce any term or condition of this Agreement shall not be deemed a waiver of that term or condition or any other terms or conditions. Any waiver must be made in writing and signed by the waiving party to be effective.”
Conclusion
A waiver allows one party to temporarily or permanently give up a right under a contract, offering flexibility in how terms are enforced. While useful for managing relationships and resolving issues, waivers must be handled carefully to avoid confusion or unintended changes to the agreement.
By including clear waiver clauses and documenting any waivers in writing, businesses can maintain control over their agreements while still accommodating specific needs or circumstances. It’s a practical tool for balancing strict enforcement with flexibility.
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.