Waiver Clause: Meaning, Drafting Tips & Sample Language

A waiver refers to the voluntary relinquishment or abandonment of a right or claim by one party. It is a common legal term that holds significant importance in commercial contracts. This article will provide a concise overview of the definition of waiver, offer a couple of examples of how it is handled in commercial contracts, and highlight the key elements to consider while drafting a waiver clause.

In the context of contracts, a waiver is an intentional act by which a party voluntarily gives up a right or claim. It is typically expressed in writing or through the conduct of the party. A waiver can be temporary or permanent, and it often requires consideration (i.e., something of value exchanged between the parties).

Typically nested inside the boiler-plate section (alongside Notices and Entire Agreement), a waiver clause:

• Requires any waiver to be explicit and in writing.
• States that one-time leniency (e.g., late payment) does not waive future enforcement.
• Often reserves all rights even when a party grants temporary relief.
• May sit beside a Reservation-of-Rights sentence to reinforce the point.

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Why does it matter?

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Key elements of a well-drafted Waiver Clause:

1. Scope of Waiver: Clearly defining the specific rights, privileges, or claims being waived, and any limitations or exceptions to the waiver.
2. Voluntary and Informed Nature: Establishing that the waiver is being granted voluntarily and with full knowledge and understanding of the rights being relinquished.
3. Consideration: Specifying any consideration or exchange of value received in return for granting the waiver, if applicable.
4. Non-Waiver Provisions: Including language clarifying that the waiver is limited to the specific circumstances outlined and does not constitute a waiver of any other rights or future claims.
5. Severability: Ensuring that the waiver clause can be severed from the rest of the contract if found to be unenforceable, without affecting the validity of the remaining provisions.

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Example language:

• Liability Waiver (e.g., for recreational activities): "By signing this Agreement, I voluntarily and knowingly waive and release [Company] and its employees, agents, and representatives from any and all claims, liabilities, or causes of action arising out of or related to my participation in [Activity], including but not limited to personal injury, property damage, or death."
• Intellectual Property License Agreement: "Licensee hereby waives any and all claims or causes of action against Licensor arising from the use of the Licensed Technology, except for claims arising from Licensor's gross negligence or willful misconduct."
• Real Estate Purchase Agreement: "Buyer hereby waives the right to object to or terminate this Agreement based on the results of the property inspection, provided that such inspection does not reveal any material defects or latent conditions that were not disclosed by Seller."
• Loan Agreement: "By executing this Agreement, Borrower waives any right to assert the defense of usury or claim that the interest rate or fees charged by Lender are excessive or unlawful under applicable law."

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Contract types where a waiver is crucial:

Common structures and market practices:

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Notes for drafter:

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Bottomline:

A Waiver Clause is the contract’s “forgiveness without forgetfulness” guard-rail. It lets parties show grace today while keeping tomorrow’s rights intact - provided the wording is tight and the behaviour stays consistent.