Rethinking Waiver Provisions

Here’s a standard waiver provision:

Waiver. No provision in this agreement may be waived, except by means of a writing signed by the party against whom the waiver is sought to be enforced.

I find such provisions very odd.

Let’s start by considering what a waiver is. There are two kinds of waiver:

First, a contract might specify that Widgetco has to satisfy a condition before Acme can be required to perform. Acme could elect to waive satisfaction of that condition and perform even though the condition hasn’t been satisfied.

Second, if Widgetco fails to perform an obligation, Acme could elect to renounce damages and proceed with the contract as if there had been no breach. That’s commonly understood to constitute a waiver.

What bearing does that have on the standard waiver provision? Well, the standard provision is phrased as a prohibition. Since Acme is the party that would be making the waiver, the prohibition in effect operates against Acme—it may not waive satisfaction of a condition or nonperformance of an obligation unless that waiver is in writing. That’s flat-out illogical.

Instead, the provision should say that a waiver won’t be effective unless it’s in writing. Here’s how:

Waiver. No waiver of satisfaction of a condition or nonperformance of an obligation under this agreement will be effective unless it is in writing and signed by the party granting the waiver.

The above provision also improves on the standard provision in three ways: It makes clear what a waiver is. It uses the adjectival phrase in writing instead of using the archaic noun writing. And it omits the clumsy “against whom the waiver is sought to be enforced.”

Note that I didn’t set out this afternoon to recast the standard waiver provision. But that sort of remedial work is inevitable, given the pervasive dysfunction in mainstream contract drafting. I hope at some point to undertake a comprehensive reworking of boilerplate.

But I’ve given this a half-hour of thought. I’m sure you won’t hesitate to point out any flaws in my logic.

About the author

Ken Adams is the leading authority on how to say clearly whatever you want to say in a contract. He’s author of A Manual of Style for Contract Drafting, and he offers online and in-person training around the world. He’s also chief content officer of LegalSifter, Inc., a company that combines artificial intelligence and expertise to assist with review of contracts.

10 thoughts on “Rethinking Waiver Provisions”

  1. Am I glad I stumbled upon this website, and in particular this blog! For all this time I thought I was the only lawyer nuts enough to care about dissecting, manipulating and toying with contractual prose, and suddenly I realize that not only have I brothers in pens, but that they actually have a hideout to meet and discuss the matter in depth! This is a real nice discovery, and you can be sure that I will avidly read (and use) your posts and comments from now on. Thank you, Mister Adams !

    If I dared I would just have one suggestion : how about addressing topics linked to multi-national / multi-language agreements ? As a French in-house lawyer working in China, this would be of particular interest to me… And God knows there are a lot of issues to discuss.

    P.S. : I realize this comment has nothing to do with today’s topic, but I just couldn’t waive the right to post !

  2. One other provision that is often found in the “No Waivers” section is something akin to the following:

    “The waiver by a party of a breach or default under any provision of this Agreement shall not be construed as a waiver of any subsequent breach of the same or any other provision of this Agreement, nor shall any delay or omission on the part of either party to exercise or avail itself of any right or remedy it has or may have hereunder operate as a waiver of any right or remedy.”

    Some of that is encompassed by your short and sweet provision, but I think it’s also worth clarifying that waivers are discrete and not continuing.

    Also, because of the work I do, we do a little belts and suspenders and add the following:

    “No terms and conditions contained in any “shrink-wrap,” “click-wrap” or “click-through” license or similar electronic notification shall be of force or effect, nor shall any terms and conditions contained on Vendor’s website, invoice or similar transactional document be deemed to amend or supplement this Agreement.”

  3. 10803: I intentionally limited my analysis to the bare minimum. I agree that generally you might want to add a little more. For example, I added the following to a redraft I’m currently working on: and no such waiver will constitute a waiver of satisfaction of any other condition or nonperformance of any other obligation..

    And you probably won’t be surprised to have me say that I’d be inclined to take a machete to your language! And I’m not sure the “shrink-wrap” stuff relates to waiver.


  4. Me too. I fix what I can when I can. Unfortunately, the more I complain about how messed up the forms are, the more people tell me to go ahead and fix them.

  5. In response to 10803, the additional language suggested regarding negating click wrap and such from vendors should be mutual in a good relationship agreement and also void the buyer’s additional pre-printed and other additional or different terms included on buyer PO’s and order forms.

  6. How about simply this:

    “Each waiver of a right or obligation arising under this Agreement must be in writing and signed by the waiving party. [OPTIONAL:] Each party agrees not to assert a waiver that does not comply with the previous sentence.”

    The second, optional sentence is an attempt at a layered defense. Suppose that a conventional waiver-restrictions clause was not binding under local law. The second sentence attempts to convert any assertion of waiver into an express breach of contract. Probably too green-eyeshady, but I’ve put language like that into a few contracts.

  7. I just realized that “in writing and signed by the waiving party” could be argued to impose an extra signature requirement if the waiver is contained in a longer document. That’d be one reason to use writing as a noun, as in a writing signed by the waiving party.

  8. D.C.: I’m not crazy about your formula: I want to make it clear that we’re dealing with conditions to effectiveness. As I say in MSCD, it’s risky to rely on must by itself to express a condition.

    I think your optional sentence is, indeed, too clever by half!

    And I’m not concerned about your signature issue.


  9. Ken, I take your point about must being (arguably) a weaker way of expressing a condition, although in a dispute I certainly wouldn’t unilaterally concede the point.

    Here’s another stab at it, combining your- and my approaches — I’m possibly overlawyering it, but like software, it’s good to take as many use cases into account as possible:

    No alleged waiver of a particular condition, right, or obligation arising under this agreement is to be given effect unless that specific waiver is stated in a document signed by the waiving party.

    I think this addresses the concern that a waiver of Item X should not be deemed a waiver of Item Y. There may be better ways to word the language to that effect.

    This is a useful exercise, I think; you might want to post more of these clauses for “community markup.”

  10. D.C.: A few things come to mind:

    I don’t think “alleged waiver” is necessary. Since what’s at issue is effectiveness, referring simply to “waiver” entails no risk.

    I don’t think anything is gained by referring to waiver of a right. If I have discretion to do something and I don’t do it, that’s not a waiver. Instead, I’m simply exercising my discretion.

    For two reasons, I don’t like “is to be given effect.” For one thing, it’s a wordier alternative to “will be effective.” But more to the point, it’s language of obligation. (See MSCD chapter 2, [3-5].) I want my desired result to be automatic, so I prefer language of policy.

    “Specific” constitutes needless elaboration.

    Instead of “is in writing and signed by,” you suggest “is stated in a document signed by.” That’s OK, but it’s conventional to refer to amendments not being binding unless they’re in writing, and notices having to be in writing, so I’m inclined to stick with my formula.

    You propose “the waiving party” instead of “the party granting the waiver.” I could go either way on this, but “waiving party” might be a bit legalistic. (And I’m having a hard time repressing the picture of someone waving a handkerchief from the deck of a ship!)

    I’m not a great fan of “community markup,” as I indicated in my article on wikis.

    Sorry to be such a curmudgeon!



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