Waiver

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Waiver
/ˈweɪvə/ (n.)
A topic that can give a common lawyer hives and an under-confident credit officer an decent psychiatric episode: so much so that it once led to someone creating a pioneering “no waiver” clause, and legal eagles and credit officers liked it so much they hasve kept it ever since.

These days, no waiver clauses are so deeply woven into the legal furniture of commerce that we barely pause to regard them. We even see them in NDAs, for heaven’s sake.

What is waived can never die. Can it?

Our legal friends are liable to spout much paranoid nonsense about waivers — some of it will trampling upon the very founding principles of the law they learned at their first-year contract law tutor’s breast — if the proposition is advanced that “we have a right, but we didn’t use it, and now we might have lost it”.

Lost it? Forever? Can a contractual right, unexercised, really just evaporate from the page while counsel wring their hands, like so much dew in the morning sun, or that alcoholic gel you find in the public conveniences of officious yet parsimonious organisations?

Your contractual rights are a not quite that ephemeral — at least not under English law. (Americans might like to check our page on course of dealing however). You don’t lose them forever just because you don’t exercise them: you might, however, be delayed in being able to exercise your rights.

To find out more, see our articles about the two kinds of waiver: “waiver by election” — really, to state the bleeding obvious that by selecting one thing under a contract, you are foregoing its mutually exclusive alternative (for example, you can have velveteen leopardskin upholstery in your new Tesla, or chintz, not both); and “estoppel by waiver” that, by your conduct in the furtherance of an existing contract, your election not to exercise a right gives right to an expectation you won’t exercise it, at least without giving further notice and a reasonable time for your counterparty to sort themselves out and get ready to perform it. Spiritually related, we think, to the reliance and change of position aspects of a defence to a claim in restitution.

Generally, litigation tends to concern waiver by estoppel, and arguments about waiver by election trouble only cakeists.

Waiver chains

You will see deep in the boilerplate confections like this:

“Any waiver of any breach of this agreement shall not be deemed to operate as a waiver of any subsequent breach thereof.”

You know what the JC thinks about contractual denials of things no-one was asserting in the first place: they are a waste of trees. Is this, as it seems, such a waste of trees, or are waivers some kind of magical force-field of contractual energy, that spark and fizz and o’er-leap logical gates, like pole-vaulting crabs — that one waiver could trigger a chain of waivers, snaking into the distance, or mushrooming exponentially into a violent litigatory fireball?

Now, to be sure, it has been a while since the JC sat in a contract law lecture — but, readers, we don’t remember the golden thread of precedent that led down this particular alley. Nor, as far as we know has there been a new one in the intervening decades to justify this boilerplate. We suspect this is paranoid, throwaway verbiage — perhaps prompted by a near miss once, or a bad dream, or one of those psychiatric episodes credit officers are prone to.

The estoppel is specific to the particular circumstance. If you have a recurring right (you know, like to make a margin call), then just because you waived it once — even if you somehow permanently waived it — that doesn’t mean you have waived it for all time. Just because you didn’t enforce this time, that doesn’t mean you are prevented from ever enforcing in the future. This is at least implicit in the following passage from the leading modern case on waiver, Kosmar Villa Holidays plc v Trustees of Syndicate 1243:

Estoppel, however, is a promise, supported not by consideration but by reliance. It is a promise not to rely upon a defence (per Lord Diplock) or a right (per Lord Goff). It requires a representation, in words or conduct, which must be unequivocal and must have been relied upon in circumstances where it would be inequitable for the promise to be withdrawn. The need for such unfairness probably means that the reliance of the representee has to constitute a detriment, but even the detriment has, I would think, to be such as to make it inequitable for the promise to be withdrawn. For these reasons, the estoppel may not be irrevocable, but may be suspensory only. An unequivocal representation without the necessary reliance, and reliance without the necessary unequivocal representation, are each insufficient.

It may be a real fear, but we are not persuaded it would bear real fruit. It makes little sense. After all, on the English law theory of the game, a waiver is an impermanent, for the time being, sort of thing. You can stop a single waiver, as long as you give your counterparty time to get back on her horse and fashion enough of a run-up so she can approach the fence at a reasonable clip.

So, even if one waiver could spark another one — and who knows, there could be events so closely related you trigger them all at once, we suppose — they can be doused easily enough later on. But really, your better bet is not to make contractual relations with the sort of person who would take that kind of point. Our home-baked latin maxim refers: non sis arsholeus nec mercatum cum arsholibus facias.

Contracting out

You can of course contract out of waivers. The rent review process in a standard commercial lease is a good example of when this happens. Time is deemed not of the essence: if the review is delayed, the landlord is entitlted to back-date it to when it was entitled to conduct rent review (though it will generally be held to an objectively-determined market rental for the period). We discuss gthis in a little more detail here

See also

• Waiver | Waiver by election | Waiver by estoppel
• Course of dealing under the Uniform Commercial Code
• Estoppel
• No waiver boilerplate clause
• I never said it was