WAIVER

The Principle Where an individual promises to give up rights under a contract this may amount to a waiver. The doctrine of waiver is a set of rules of law that commonly apply to contract, but apply also across many areas of law. A waiver may relate to forbearance from exercising a right or abandonment of a right. In either case, the person has waived their right to enforce the term, and the legal rights of the party waiving their rights have been lost. A party relinquishes a legal right when they make an informed choice by their words or conduct in respect to two or more courses of action, in circumstances recognized at law. In the context of commercial contract, waiver alters legal obligations whereby a person may be prevented from asserting a legal right (waiver by election) or raising a defence that would otherwise be available to them. Waiver allows a party to give up his legal (usually contractual) rights. For instance, a contract may provide for a particular mode of performance. If party A to the contract is unable to meet the precise mode of performance fixed by the contract, it may request party B not to insist on performance in this way. If that request is accepted by B, he is likely to have waived his rights to require that performance takes place in the particular way provided by the contract.

Waiver can arise in a number of ways. A right may be waived by contract or deed. Alternatively, a party may seek to waive its rights by election. A common instance where waiver by election arises is where an innocent party, following a repudiatory breach of contract by another party, has to choose whether to terminate the contract or to affirm it. For more on repudiatory breaches and termination, please see part 9 of our 'before you charge in' series: At the heart of it: repudiatory breaches and termination. In other situations, a party may behave in such a way that it would be fair to treat it as having made a deliberate choice to waive, whether or not it has. This is often referred to as waiver by estoppel. Given the issues that are thrown up by waiver, it is common for agreements between parties to provide a 'no waiver' clause. The rationale behind such a clause is to give assurances that failure to enforce contractual rights, whether intentionally or by oversight, does not result in the waiver of rights and remedies for their breach. However, a party with the right to terminate an agreement for the other party's breach can lose that right even if that agreement contains a 'no waiver' clause.

Treitel identifies three meanings of word waiver namely: To mean rescission

Where both parties abandon the contract the rescission is valid and generates its own consideration. Rescission not supported by consideration is not enforceable at law. To mean variation

Where both parties vary the contract, the variation is valid provided that it generates its own consideration. To mean forbearance

A variation of contract may fail for want of consideration or for lack of form, yet have some limited effect in law. Treitel distinguishes such variation from contractually binding variations and calls them forbearance.