Waiver V/s. Non-Waiver (A Legal Perspective)

A waiver is the voluntary relinquishment or surrender of some known right or privilege.

By way of example, “waiver may occur when a business declines to charge a late payment fee even though the terms of the contract expressly provide for the imposition of late payment fee penalties.”

A party may decide not to strictly enforce the provisions of the contract on a particular occasion or under certain circumstances. It might, for example, accept late payments without insisting on an agreed-upon penalty. 

In the late payment scenario above, let’s assume that the contract does not include a non-waiver clause, in the event of dispute of late payments a court would be likely to hold that acceptance of the bimonthly/late payments do not constitute a breach of the contract. A non-waiver clause would have ensured that the party did not waive its rights to require on-time payments in the future simply because it has declined to enforce its rights to late fees.

The purpose of a "no waiver" clause is to try to ensure that a party's failure to enforce its contractual rights, whether intentionally or by oversight does not accidentally or informally waive its rights to bring proceedings and recover damages etc under the contract in the event of a breach of the contract by the other party.

A non-waiver clauses can be written broadly or narrowly. For instance, some business contracts may be drafted to broadly state that “no breach of any provision of this Agreement will be waived except with the express written consent of the party not in breach.”;

or may be narrowly drafted to state, “The waiver by the Employer of a breach by the Employee of any provision of this Agreement will not operate or be construed as a waiver by the Employer of any other subsequent breach by Employee.”