Archive for September 22nd, 2010

Dear Danielle: What Does the Waiver Mean?

Dear Danielle:

As you may remember, I purchased a set of your awesome business forms. Question: Can you clarify the waiver? “Any waiver by either party of a breach or violation of provision of this Agreement by the other party shall not operate or be construed as a waiver of any subsequent breach by either party. No waiver shall be binding unless executed in writing.” –TG

Great to see you reading so thoroughly! First, I need to make clear that I’m not an attorney (obviously) so this isn’t to be construed as legal advice.

However, as business owners, we do need to have at least a basic working knowledge about contracts and such, what certain terms mean and why you have them in your contracts (or understand them when you are signing contracts). So this is a really smart question for you to be asking. :)

What this clause basically means is that if one party breaches (violates) a part of the contract and that breach is waived (allowed or “forgiven”) by the other party, that doesn’t mean that if they breach another part of the contract, that second breach will also automatically be waived or forgiven.

It means that each breach is handled independently, and if a waiver is given (i.e., you decide to let it slide), it won’t be binding or enforceable unless it’s put in writing. It also means that just because you might waive one occurrence of a breach, you are not obligated to waive it again or allow it to continue.

The reason you have these in your contracts is like anything else in business–because it helps make sure everyone is operating under the same understandings. It’s about putting things in writing and clearly spelling out expectations for doing business together, and what happens when those expectations and obligations to each other are not met.

Without these kind of terms committed to writing, it’s much more difficult to enforce them legally should that become necessary. Ultimately it’s all about keeping things fair and honorable and creating the best circumstances for playing nicely with one another.

As with all things legal, always, always consult a lawyer for the last word in these matters.