Introduction
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Every agreement includes a variety of clauses that are sometimes brushed off as simple “formalities.” These well-known boilerplate clauses pop up in nearly every contract, regardless of the type of transaction. They’re frequently copied and pasted without much consideration, leading many lawyers to believe they don’t require negotiation or personalisation. However, here’s the interesting part: the details can make a significant difference!
Too often, boilerplate clauses are included without careful consideration, even when they don’t serve a real purpose in that specific agreement. Some lawyers may insist, “Oh, these are just standard clauses,” but a standard clause in one contract could be completely irrelevant, or even problematic, in another. A careless copy-paste job can lead to unintended consequences, making it essential to analyze each clause before using it.
Nevertheless, certain attorneys adopt an opposite approach, believing that reducing standard clauses will enhance the agreement’s conciseness and attractiveness to the client. However, this strategy poses significant risks. Each clause serves a specific purpose, and prior to eliminating or altering any provision, a thorough risk-benefit analysis is imperative. Ultimately, the essence of a well-crafted contract lies not solely in brevity but also in clarity and protection.
Being a pro-lawyer involves finding the balance between the two scenarios!
One of the most common boilerplate clauses is the waiver clause. In the next section, we’ll explain how to draft the perfect one for your next contract!
What’s a Waiver Clause and Why It’s Important
Meaning: What Is a Waiver Clause?
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A waiver is a way of letting go of a right, whether you mean to or not. In contract law, a waiver clause explains how someone can give up a right and what that means for them down the line.
You’ll find that most contracts have some sort of waiver clause, but its importance is often not fully appreciated. This clause helps clear up when and how a contractual right might be lost. Without it, something as straightforward as not enforcing a late payment just once might be taken to mean that you’ve given up the right to ask for timely payments in the future forever.
Understanding the waiver clause is crucial to ensuring that rights are not unintentionally forfeited. It is not just legal fine print. It can have a real impact on how a contract is enforced.
How a Waiver Clause Works
To understand how a waiver clause functions, let’s consider a scenario: Suppose you run an online OTT subscription service, and your contract states that customers must renew their subscription by the 10th of each month. The agreement also includes a clause allowing you to suspend access if a payment is late.
For the first six months, a particular customer renewed on time. However, in the seventh month, they made the payment five days late. You decide not to suspend their access, perhaps because they’ve been a long-time subscriber, or maybe you were too busy to notice the delay.
By not enforcing the suspension, you have effectively waived your right to take action in that instance. But does this affect your ability to enforce the rule in the future? What if the customer makes another late payment in the future? Are you still allowed to suspend their access? Or will this past decision to overlook a late payment bite you later?
The answers depend on whether your contract includes a waiver clause and how it is worded.
Do We Need a Waiver Clause At All
In contract law, failing to consistently enforce a right can sometimes be interpreted as forfeiting that right. A waiver clause helps prevent this by clarifying that just because a right isn’t enforced at one time, it doesn’t mean it’s permanently waived.
For the party with enforcement rights, a waiver clause ensures that leniency on one occasion doesn’t lead to a loss of legal protections in the future. For the other party, it provides clarity on whether contractual terms will be applied strictly or with flexibility.
While a waiver over something like late payments might seem minor, waivers can involve far more critical rights, such as the ability to terminate the contract due to a breach. The specific language of the waiver clause plays a crucial role in defining the scope and enforceability of contractual obligations.
Different Types of Waiver Clauses and When to Use Them
Here are some of the most common waiver clauses found in contracts, along with examples of how they work.
Affirmative Waiver
An affirmative waiver states that simply failing to enforce a right doesn’t mean you’ve waived it. To make a waiver effective, you must explicitly communicate your intent to waive that right.
Example: Imagine you lease office space to a business, and your contract requires tenants to submit maintenance requests in writing. One month, a tenant verbally asks for repairs, and you allow it without enforcing the written requirement. Under an affirmative waiver clause, this doesn’t mean you’ve permanently given up your right to insist on written requests in the future. If you later require written submissions again, the tenant can’t argue that your previous leniency changed the rule.
General Waiver Prohibition
This type of clause builds on the affirmative waiver by clarifying that waiving one right doesn’t mean you’ve waived others. Each waiver must be separately stated and agreed upon.
Example: Suppose you run a gym with a strict no-refund policy, but as a goodwill gesture, you grant a one-time refund to a member who had a medical emergency. A general waiver prohibition clause ensures that this decision doesn’t set a precedent. If another member later demands a refund for a different reason, you can refuse without it being seen as unfair or inconsistent.
Written Waiver
A written waiver clause states that a waiver or extension is only valid if it’s documented in writing and signed by the party granting it. This adds an extra layer of formality and prevents verbal or implied waivers from being legally binding.
Example: You hire a freelance designer with a contract stating that all deadline extensions must be in writing. The designer submits work late, assuming you’re okay with it since you didn’t object immediately. However, under a written waiver clause, your silence isn’t enough to grant an extension—without written approval, the deadline still stands.
Course of Dealing Waiver
This waiver allows a party to enforce a right in the future, even if they’ve chosen not to enforce it in the past. It ensures that past leniency doesn’t create an expectation of ongoing flexibility.
Example: A supplier has a contract requiring payment within 30 days. A long-time client consistently pays a few days late, and the supplier doesn’t complain. Then, after several months, the supplier decides to enforce the late fee. With a course of dealing waiver clause, the client can’t argue that past non-enforcement means they no longer owe the fee.
Complete Non-Waiver
A complete non-waiver clause combines elements of the affirmative waiver, general waiver prohibition, and course of dealing waiver. It provides the strongest protection by making it clear that waiving one right at any point doesn’t impact the enforcement of any other rights: past, present, or future.
Example: A software company licenses its product to businesses under a contract that includes renewal fees. One year, they allow a client to renew late without a penalty. A complete non-waiver clause ensures this doesn’t mean future late renewals will also be excused. It protects the company’s ability to enforce all other terms of the agreement without limitation.
Pro Tips for Drafting Waiver Clauses
A well-drafted waiver clause ensures that a party’s failure to enforce a right or provision does not mean they permanently give it up. Here are 5-6 pro tips for drafting a perfect waiver clause:
Clearly State That Waiver Must Be in Writing
To avoid implied waivers, ensure that any waiver is explicitly stated in writing and signed by an authorized representative.
Example: “No waiver of any provision of this Agreement shall be effective unless it is in writing and signed by the waiving party.”
Specify That Waiver of One Right Doesn’t Affect Others
Prevent unintended waivers by clarifying that waiving one right doesn’t waive all rights.
Example: “A waiver of any term or condition of this Agreement shall not be construed as a waiver of any other term or condition.”
Ensure Waivers Are Case-Specific
A party should not be forced to waive a right permanently just because they waived it once.
Example: “A party’s failure to enforce any provision on one occasion shall not constitute a waiver of its right to enforce the same or any other provision in the future.”
Protect Against Future and Repeated Waivers
Specify that waivers are not automatic and not recurring.
Example: “A waiver on one occasion shall not be deemed a waiver on any subsequent occasion, whether of the same or a different nature.”
Avoid Ambiguity with Strong Language
Use precise and unambiguous wording to reduce potential disputes.
Example: “No delay or omission by either party in exercising any right shall be construed as a waiver of such right.”
Some More Resources At Your Disposal!
Learning by Doing!
Imagine your client owns a manufacturing company that supplies parts to a retailer under a contract that requires payment within 30 days of the invoice. One month, the retailer missed the payment deadline, but since they’ve been a reliable customer, the client decided not to take any immediate action.
A few months later, the retailer is late again. This time, the client decided to enforce the late fee as per the contract terms. However, the retailer argues that because the client didn’t enforce the late fee the first time, they’ve waived their right to enforce it now.
This is where a waiver clause becomes essential. If your contract includes a well-drafted waiver clause, it will clearly state that failing to enforce a right once does not mean waiving it permanently. Draft a clause by yourself and then match it with the sample given below to improve your skills!
Sample Waiver Clause
“No failure or delay by either party in exercising any right, power, or remedy under this Agreement shall constitute a waiver of that right, nor shall any single or partial exercise preclude any further exercise of the same or any other right. Any waiver must be explicitly stated in writing and signed by the waiving party. A waiver of any specific breach or default shall not be deemed a waiver of any subsequent breach or default of a similar or different nature.”
Check Out These Sample Templates for More Exposure
Liked This? Want to Learn More? We Got You!
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