Giving Up Your Contractual Rights: The Doctrine of Waiver

When you sign a contract, you are entitled to certain rights under the contract. However, sometimes it is possible to give up one or more of those rights, such that you can no longer rely on them. This is done through a legal doctrine called “waiver.”

How do you know if you or your contracting partner still has the right to rely on a contractual right, or if that right has been given up? In Saskatchewan River Bungalows Ltd v Maritime Life Assurance Co (“Saskatchewan River Bungalows”), the Supreme Court of Canada stated there were two elements required to prove that someone has waived their rights:

  1. The party had full knowledge of their rights;
  2. The party had an unequivocal and conscious intention to abandon those rights.

It will not always be clear when someone has waived their rights under a contract, and the answer will depend on all the surrounding circumstances. Hiring a contract litigation lawyer or a breach of contract lawyer can help you determine whether there is a waiver in your case.

Part One: Full Knowledge of Rights

In order for a person to waive their contractual right, they must have had full knowledge of the existence and nature of their rights.

Part Two: Intention to Abandon Rights

A party must communicate intention to give up their rights. This intention does not need to be communicated formally, such as in a written letter or a signed waiver agreement. It can be communicated informally, and can be sometimes inferred through conduct.

In the case of Saskatchewan River Bungalows, an insurance company argued that an insurance policy was no longer in effect because the insured was late on their payments. The SCC found that the insurance company had, in fact, waived its right to timely payment. The requisite intention was found in a letter the insurance company sent to the insured, after the insured missed the payment deadline, advising the insured that they required immediate payment of the premium in order to continue to be covered under the policy.

In the 2021 Ontario Court of Appeal case Campbell v 1493951 Ontario Inc, the Court held that if someone was misled by another party into believing that they were not waiving their rights, when in reality they were, they will not waive away their rights. The other party does not need to be intentionally misleading them for this protection to kick in.

How to Retract a Waiver

In some circumstances, a party may be able to take back a waiver they previously gave. This would allow them to again rely on the contractual right they previously gave up.

A retraction is possible if a party gives “reasonable notice” to the contracting party who benefits from the waiver. Whether the notice was reasonable will likely depend on each case’s unique facts, but the main concern courts have is to protect the interests of the party who relied on the waiver. In Saskatchewan River Bungalows, the insurance company gave notice of three months before seeking to rely on the retraction. The Supreme Court of Canada (the “SCC”) held that a notice of three months was reasonable, and allowed the insurance company to retract its waiver.

However, it may not be necessary to give “reasonable notice” if the other party did not actually rely on the waiver. For example, in Saskatchewan River Bungalows, the party who benefitted from the waiver did not check its mail often, and missed the letters from the insurance company wherein the company waived its rights. In such a scenario, the SCC ruled, the company was not required to give notice of its intention to rely again on its contractual rights.

Statutes Can Affect Ability to Waive Rights

Before a party seeks to rely on a waiver argument, they should make sure to check if any statute precludes/limits how waiver can be applied.

In Trial Lawyers Association of British Columbia v Royal & Sun Alliance Insurance Company of Canada, the issue was again, between an insurance company and a party seeking to recover insurance funds. The court held that, in that case, the insurance company could not waive any contractual rights through its conduct because the Insurance Act that was applicable at the relevant time required that any waiver had to be given in writing.

Our Law Firm May be Able to Help you with Waiver Issues

The contract dispute lawyers at Walker Law are well-equipped to handle issues of waiver.

In the 2016 Ontario Superior Court of Justice case 2316796 Ontario Inc v Chetti (“Chetti”), Walker Law successfully argued that a party had waived its rights under a commercial real estate contract. Walker Law later represented its client in an appeal, where the Ontario Court of Appeal upheld the Superior Court of Justice’s decision.

In Chetti, Walker Law represented the plaintiff who was a restaurant operator, that entered into a contract to assign their lease and sell some assets to the defendant which was a fellow restauranteur. The contract was conditional upon the landlord consenting to the lease assignment by the closing date. However, the parties moved forward with the assignment and sale before the closing date, without waiting for the landlord’s consent.

The landlord did not consent by the closing day and the defendant attempted to void the contract by saying the plaintiff missed the deadline for getting the consent. However, the Court found that the respondent waived strict compliance with the closing day deadline. The Court cited three reasons for this finding: (1) the defendant took over the property before the closing date and already began renovating it; (2) after the deadline for the landlord to consent passed, the defendant continued to wait for the consent; and (3) the defendant agreed in writing to the lease assignment, months after the deadline for the assignment passed.

There are many factors to consider when you are trying to figure out if a party to a contract has waived their rights. If you are unsure about whether waiver applies to your situation, contact a reputable litigation law firm to help you gain a better understanding of your rights.

Tags: Civil Litigation Law, Contract Disputes

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