Waiver of Breach of Contract: Everything You Need to Know
A waiver of breach of contract can be used to waive your rights to sue a party who has broken a contract.3 min read
A waiver of breach of contract can be used to waive your rights to sue a party who has broken a contract. Waivers can be granted in many forms, and will only apply to the specific breach, not the entire contract.
Remedies for Breach of Contract
A breach of contract occurs when one party fails to fulfill their obligations as described in the terms of the contract. The party injured by the breach of contract has the right to seek remedies for the breach. Often, this means suing the breaching party, although this may not always be the case.
It's possible that the party damaged by the breach of contract may choose to ignore the breach. This is called a waiver of breach contract. Waivers are granted in several ways, including through conduct. If, for example, one party made a late payment to the other, and the late payment was accepted, this would be waiver of breach of contract through conduct. A waiver may be implied or express.
If you decide to waive a breach of contract, it means you are giving up your right to pursue remedies for the breach. You should also remember that you will still be responsible for performing your contractual duties, and will not be able to use the breach as an excuse for nonperformance. A waiver of breach of contract only applies to a single matter. The injured party can still require fulfillment of the rest of the obligations described in the contract.
When one party is damaged by a breach of contract, they have the right to receive damages. In most cases, these damages will take the form of money, which is meant to restore the party's financial position prior to the breach.
What Are Non-Waiver Clauses?
Providing a waiver of breach of contract means you are either abandoning your rights to damages or are giving up your ability to enforce the contract.
You can grant a waiver in several ways:
- In writing.
- Through your conduct.
Waivers do not need to be expressly granted, and in many cases, a waiver of breach of contract is implied by the actions of one of the contracted parties. Because a waiver of breach of contract can be implied through conduct, it's common for situations to arise where the damaged party abandons their legal rights by mistake. Obviously, this can be very unfortunate for the non-breaching party.
The purpose of a nonwaiver clause is to protect one party's contractual rights, including the right to pursue remedies for breach of contract, if they fail to take action when a contract is broken. Typically, these clauses will state that one party's failure to exercise their rights does not mean that they are waiving these rights.
If a party fails to enforce a contractual duty in one circumstance, it will not eliminate their ability to enforce said obligation at a later time. When a breach occurs that gives the injured party the right to end the contract, they must either consider the contract ended and file a lawsuit against the other party or continue to enforce the contract.
After a breach, a contract would be considered affirmed if the damaged party is fully aware that the breach has occurred but continues acting as if the contract were still in place. For instance, if an injured party ignores the breach for too long, it could be considered that they are affirming the contract.
There has long been an unclear relationship between affirming contracts after a breach and nonwaiver clauses. Similarly, there has been some question about how much authority nonwaiver clauses possess.
The practical solution for preserving contractual rights is for the injured party to send a letter to the breaching party as soon as possible after the breach has occurred. This letter should explicitly state that the damaged party is reserving their right to end the contract.
While sending this letter can be helpful, the damaged party should be sure that their actions reflect their desire to reserve the right of contract termination. If they are not careful, it's possible that their actions could be constituted as affirming the contract. When this happens, the injured party would no longer be able to terminate the contract for the breach.
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