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\"W\" is for waiver.

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Waiver is the intentional relinquishment of a right or claim. It is when one party agrees to "give up" an existing, or in some cases, future right. A waiver could apply to a right a party has under a contract or it could apply to a right the party has as a matter of law.

A construction contract is the document which governs the relationship between two or more parties. It contains the rules by which the parties have agreed to do business. This contract sits within the wider context of the law. The contract consists of "rights" and "obligations".

The party which has the benefit of a right under a contract can waive that right. For example, a client may have the right to keep 5% of every payment due to the contractor as retention (until it is required to be released in accordance with the contract). The client could choose to waive its right to keep 5% of each stage or the monthly payment.

Waivers can occur expressly: in written or oral statement. Alternatively, a waiver can be implied by the conduct of the party. In the example above the client could write to the contractor stating that it will waive its right to retention. Alternatively, it could simply pay out the full 100% of each payment falling due and not hold on to the 5%, in which case there would be an implied waiver of the right.


A difficulty can arise where a right has been waived for an event which repeat throughout the project. In the example of retention above the right to retain 5% repeats each time a payment becomes due through the project.

If the relationship breaks down between the parties to a contract it is not unusual for a party waiving a right under that contract to decide it no longer wishes to waive it. The party with the benefit of the waiver will argue that the other party waived every occurrence of the event, the party waiving will say it did not. As to whether the party has waived every occurrence of the event will come down to the facts of each case.

It will be straightforward if the party sent a letter expressly waiving a right but explaining that it reserves its right in the future, in this example - to hold retention from future payments due. It will be less straightforward if the waiver had been implied, it occurred by conduct.

A common case is where the contractor missed the date for completion of its works and the client is entitled to liquidated damages. The client does not expressly mention it to the contractor but it does not deduct the liquidated damages as they fall due.

Later the client decides that it will deduct the liquidated damages. The contractor claims that the client has, after all that time, waived its rights to liquidated damages. In this case the right to liquidated damages, for the full period of culpable delay, reoccurs with every day or week the works are late. As the right reoccurs it allows the party with the right to liquidated damages to waive, or not. The best way to avoid being caught out is to set out in a letter to other party what is intended by the waiver.

Other rights occur as a matter of law, for example, the right to take a lien over property or the right to sub-contract works.

These rights under the law may be waived and are usually waived expressly.

Such waivers are typically obtained before commencement of the works and may be drafted into the terms of the contact itself. It may not be described as a "waiver", it may be that the parties have simply agreed in the contract that something else will happen. It is also referred to as "contracting out" of a provision in the law. These waivers can operate so as to relinquishes an existing right or a future right.

Beware, there are rights existing as a matter of the law which the law does not allow a party to waive. These are the mandatory provisions of the law. For example, an employee cannot waive certain of his employment rights, such as the right to the minimum amount of annual leave.

Suzannah Newboult is a construction dispute specialist at DLP Piper LLP

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Publication:Construction Week
Date:Feb 11, 2014
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