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Waiver sometimes arises in contractual relationships where a contracting party's conduct indicates that they are waiving their contractual rights. Waiver is generally described as the intentional relinquishment of a known right or intentional conduct that is inconsistent with claiming that right. For example, a landlord may waive its right to declare a forfeiture for failing to pay by a certain date if the landlord repeatedly fails to demand payment from the tenant by that certain date. Waiver may be asserted as a defense to breach of contract claims when appropriate. When a party waives its rights under a contract, then it has essentially waived its right to enforce the contract or claim damages in connection with that particular breach.
In an attempt to avoid this situation, some drafters include "non-waiver" provisions in their contracts, which generally provide that no rights are being waived even if a party's actions indicate that the party's contractual rights are being waived. Non-waiver clauses may includes clauses such as: (a) the failure or delay to enforce an obligation, or exercise a right or remedy, will not amount to a waiver of that right, remedy, or obligation; (b) the waiver of a breach of a contractual term will not amount to a waiver of a breach of any other term of the contract; or (c) the waiver of a particular obligation in one circumstance will not prevent a party from requiring compliance with the obligation on other occasions in the future. The non-breaching party may attempt to rely on such provisions in response to a waiver defense to a breach of contract claim.
However, the effectiveness of such non-waiver provisions is questionable at best. Courts have found that these non-waiver provisions are wholly ineffective and that they may be waived just like any other contractual provision. As a result, non-breaching parties should try to take appropriate steps to avoid the appearance that it has intentionally relinquished its known rights under the contract. For example, the non-breaching party should send a letter after the breach informing the breaching party that they are expressly reserving their right to terminate the contract and make sure that their subsequent conduct is consistent with that assertion. The non-breaching party should also decide as soon as possible whether they will exercise their rights and
terminate the contract. While these are not guaranteed to avoid the waiver defense, these steps may be helpful in protecting contractual rights in subsequent breach of contract litigation where waiver has been asserted.
At Friedman & Feiger, LLP, our experienced attorneys will make sure that your contractual rights are protected and enforced, whether it is in the drafting of your contracts or in the litigation of them.
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