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Waiver in Contracts

| May 30, 2023 | Contracts

Waiver is the intentional giving up of a right. In the context of contracts, waiver can be used to excuse a party’s failure to perform their obligations under the contract.

In Florida, a condition in a contract can be waived, even if it is a condition precedent. This means that a party to a contract can agree to not enforce a condition, even if the condition has not been met. For example, a contract may require that a buyer obtain financing before closing on a property. If the buyer is unable to obtain financing, the seller may agree to waive this condition and allow the buyer to close on the property without financing.

There are two ways to waive a right under a contract:

  • Express waiver is when a party explicitly states that they are waiving their right. This can be done in writing or orally.
  • Implied waiver is when a party’s actions or conduct indicate that they have waived their right. For example, if a party accepts performance that is different from what is required by the contract, this may be considered an implied waiver of their right to strict performance.

The effect of waiver

Once a right has been waived, it cannot be reinstated. This means that the party who waived their right cannot sue the other party for breach of contract. There are a few exceptions to the rule that conditions in contracts can be waived. For example, a condition that is essential to the contract cannot be waived. Additionally, a condition that is waived must be waived knowingly and voluntarily.

Example. A contract requires a contractor to complete a construction project by January 1st. On December 31st, the contractor informs the owner that the project will not be completed on time. The owner agrees to extend the deadline to February 1st. This is an example of an implied waiver by the owner of their right to strict performance of the contract.

If you have any questions about waiving conditions in contracts, you should speak with an attorney.

Prevention of Performance

When hiring someone, you implicitly agree to not obstruct their work.

When one party hires another to perform a task, the hiring party implicitly agrees to cooperate with the hired party and not obstruct their work. This is because the hiring party’s cooperation is often necessary for the hired party to complete the task.

If the hiring party obstructs the hired party’s work, the hired party may be able to terminate the contract and sue for damages. This is because the hiring party’s breach of the implied cooperation clause constitutes a breach of contract.

Example: in a commercial real estate agreement, the lessor agreed to pay the broker a commission when a lease was signed, not when the broker found a tenant. Even if the lessor refused to lease to the broker’s client for no good reason, the broker could not use the cooperation rule to force the lessor to pay a commission. This is because the contract specifically stated that no commission would be paid unless a lease was executed.

If you have any questions about contract law, you should speak with a contract attorney.

Impossibility to Perform

In Florida, the doctrine of impossibility of performance “refers to those factual situations, too numerous to catalog, where the purposes for which the contract was made, have, on one side, become impossible to perform.” Ashraf v. Swire Pac. Holdings, Inc., 752 F. Supp. 2d 1266, 1270 (S.D. Fla. 2009). An example of impossibility of contract performance could be if someone contracts to deliver a specific item on a particular date, but the item is destroyed in a fire before the delivery date. In this case, it would be impossible for the person to fulfill the contract because the item no longer exists. The destruction of the item was not due to the fault of either party, but it makes performance impossible.

Or, if a person contracts to perform a concert but becomes seriously ill and unable to perform on the date of the concert. In this case, it would be impossible for the person to fulfill the contract because of their illness. The illness was not due to the fault of either party, but it makes performance impossible.

When a contract becomes impossible or pointless to fulfill, you may be excused from your obligations.

Impossibility of performance occurs when it is literally impossible for one party to fulfill their obligations under the contract. For example, if a contract requires a party to build a house on a piece of land that is later discovered to be underwater, the contract would be frustrated because it is impossible to build a house on water.

Frustration of purpose occurs when the purpose of the contract becomes impossible or pointless to fulfill. For example, if a contract is made to sell tickets to a concert that is later cancelled, the contract would be frustrated because there is no longer any purpose to the contract.

If a contract is frustrated, the parties are excused from their obligations under the contract. This means that neither party can sue the other for breach of contract.

If you have any questions about frustration of contract, you should speak with a contract attorney.