Legal Drafting Tip: Waiver

Tuesday, March 15, 2016       By Tilly Gray

It is an established legal principle that a waiver[1] of rights may be express or implied, and that the delay or failure to assert a right may be deemed to be a waiver of that right.[2] Accordingly, the purpose of a waiver clause is to clarify what would constitute an intentional waiver of a contractual right.[3]

Despite the inclusion of a clause in your agreement that specifies the circumstances under which waiver is effective, a court may determine that the conduct of a party constituted a waiver.[4] However, to minimize that risk, we recommend you include the following language from our firm’s Boilerplate Agreement  for the corresponding reasons provided:

Language

Why include it?

Requirements. No waiver of satisfaction of a condition or non-performance of an obligation under this agreement is effective unless it is in writing and signed by the party granting the waiver or that party’s authorized Representative.[5]

An express requirement that a waiver be in writing will prevail over an oral waiver.[6]

Scope of waiver. Unless expressly granted in writing and signed by the party granting the waiver or that party’s authorized Representative, no waiver will extend to any subsequent non-satisfaction of a condition or non-performance of an obligation under this agreement, whether or not of the same or similar nature to that which was waived.

A party may decide on a particular occasion or under certain set of circumstances not to strictly enforce the satisfaction of a condition or performance of an obligation in the agreement.[7]

Rights and remedies. No waiver will affect the exercise of any other rights or remedies under this agreement. Any failure or delay in exercising any right or remedy will not constitute, or be deemed to constitute, a waiver of that right or remedy. No single or partial exercise of any right or remedy will affect the further exercise of any right or remedy.

A party may forget, or encounter difficulties when it attempts, to exercise a right or remedy under the agreement, not intending for that failure, delay, or partial exercise to constitute a waiver.[8]

 


[1] See “Rethinking Waiver Provisions” (29 April 2008), on the drafting of waiver provisions generally (by Ken Adams, online at AdamsDrafting <http://www.adamsdrafting.com>).
[2] However, note that some conditions precedent cannot be waived either in writing or orally when there are considered to be a “true” condition precedent (that is, a specified event upon which the existence of the obligation depends). For example, ‘A’ agrees to work for ‘B’ and ‘B’ will pay ‘A’ $50.  (See
Turney v Zhilka.)
[3] Cynthia L. Elderkin & Julia S. Shin Doi, Behind and Beyond Boilerplate: Drafting Commercial Agreements, 3d ed (Toronto: Thomson Carswell, 2011).
[4] In
Delilah’s Restaurants Ltd v 8-788 Holdings Ltd, despite the inclusion of a waiver clause in a lease agreement, the Supreme Court of British Columbia held that by accepting rent while knowing that the plaintiff (tenant) was in breach of certain of its obligations under that agreement, the defendant (landlord) had waived those breaches.
[5] Consider whether there is any other person who is authorized to waive conditions or obligations on behalf of the party capable of granting a waiver. For example, in the real estate context, it is not uncommon for a lawyer to waive conditions in an offer to purchase on behalf of his or her client.
[6] Inc Robur et Securitas v MH Ingle & Associates Ltd, [1992] OJ No 845.
[7] For example, on occasion, a party might accept late payments without insisting on an agreed-upon penalty or allow the other party to send goods of a different quality than that which is stipulated in the agreement.
[8] In
Adesa Auctions of Canada Corp v Southern Railway of British Columbia, Adesa, owned property over which Southern Railway had a right of first refusal to purchase. Adesa notified Southern Railway of its intention to sell and Southern Railway responded that it was not in a position to exercise its right at that moment. Adesa claimed that Southern Railway’s response constituted a waiver of its right. However, the court disagreed.