No Waiver Clause: Everything You Need to Know
A no waiver clause in contracts will make sure that neither party involved in the agreement waives their right to bring suit if the other breaches contract.3 min read
A no waiver clause is a stipulation included in contracts to make sure that neither party involved in the agreement waives their right to bring suit if the other breaches contract.
What Is a No Waiver Clause?
Sometimes a no waiver clause will stipulate that the rights included in the contract are only allowed to be waived if a party gives notice in writing. The clause might say something like, "A breach of contract or any provisions in the agreement may not be waived unless the party still under contract shows consent in writing."
Some provisions or stipulations in a contract might not always be enforced in certain circumstances. For instance, in a sales agreement, used for the buying and selling of goods or services, the two parties may have agreed on a specific schedule for payments, but the selling party might allow the buyer late payments without a late fee and will therefore not be enforcing that part of the contract.
Waiver clauses basically ensure that both parties always retain their rights to enforce the provisions in their contract, even if certain stipulations have been relaxed previously.
Example of a No Waiver Clause
A no waiver clause should include some basic elements to make sure that all of the bases are covered. You'll likely find the following kind of language in a no waiver clause, "If either party fails to enforce any of the terms and conditions included in this contract, or waive their right to suit or damages in the case of breach of contract, they shall still retain their right to enforce provisions for later breaches, unless they waive their rights in written form."
Simply put, a no waiver clause should spell out the fact that both parties always have the right to enforce the terms of the contract. For example, say two parties have a contract for the delivery and payment of produce on a weekly basis. The seller of the produce allows the buyer to pay late one week. A few weeks later, the buyer wants to pay late again. The seller is not required to allow late payment simply because they have in the past.
No waiver clauses might include more specific language, for example it could read, "Rights are not waived even in the case that either party delays in the execution of their rights, powers, privileges, or remedies stipulated in the contract. Neither will the partial execution of their rights, powers, privileges, or remedies waive their right to enforce the contract provisions in full."
Even if an individual under contract only holds the other party to a contractual consequence of breach some of the time, they retain the right to bring full consequences included in the agreement at any point. If a party in a contractual agreement decides to give a bit of grace to the other party sometimes, the no waiver clause, prevents the other party from presuming upon that grace.
Parties involved in a contract that includes a no waiver clause are therefore given the freedom to do the following without forgoing their contractual rights altogether:
- Give extensions for contracted deliveries, payments, or other actions covered in the agreement
- Allow inaccurate representation or breach of contract in documentation
- Allow for non-compliance from the other party regarding any of the terms or conditions of the contract
No Waiver Clause Warnings
There are some things to watch out for when it comes to the inclusion of no waiver clauses when you draft or sign a contract. If a party does decide to waive their contractual rights, they must do so in a clearly written or oral statement.
Without a no waiver clause, the conduct of a party can be argued as a waive of rights. If one party in a contract continues to allow the other to violate certain provisions in their agreement, they may be unintentionally losing their right to enforce the contract in the future.
No waiver clauses are used in many business contracts and insurance policies. If you are entering into a contract, it might be a good idea to include a no waiver clause to help make sure that you don't lose your right to enforce the contract due to oversight or relaxed conduct.
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