Waiver (in the context of contracts)

The intentional renunciation of some legal right, immunity or privilege by some positive statement, act, or omission inconsistent with the existence of such right.

An express waiver is actually declared – explicitly renounced by the party with the right. An implied waiver is to be understood and inferred from the actions of the party in question.

Two common types of waivers found are waivers by employers for employee debt, and waivers for breach of contract

  • A waiver by an employer for a debt (a debt waiver) by an employee in respect of the employment gives rise to a taxable fringe benefit.
  • A waiver of a breach of contract is an affirmation of the contract which destroys any rights to rescind the contract and sue for damages.

An example of the latter waiver for breach of contract can be found in the case of McLachlan v Ryan (1987) 4 BCL 155. The contract gave the principal the option to cancel if the contractor did not complete the work at an agreed upon rate. The contractor failed to meet these requirements, and the principal agreed to accept $4,000 to compensate for the loss suffered. The principal then later attempted to terminate the contract on the grounds that the contractor had breached. The Court held that the principal could not use the delay as grounds for termination given that he had waived his right to insist on timely completion by accepting the monetary compensation, and that the termination was therefore wrongful.