Anti-Waiver Provisions in Contracts
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Parties in litigation often argue waiver or estoppel in an attempt to counter an adversary’s claims or defenses. A carefully crafted “anti-waiver” provision in a contract, however, can go a long way to avoid these waiver and/or estoppel arguments.
Under Florida law, waiver is defined as the intentional relinquishment of a known right. Goodwin v. Blu Murray Ins. Agency, Inc., 939 So. 2d 1098 (Fla. 5th DCA 2006). The elements of waiver are defined as follows:
1) existence at the time of the waiver of a right, privilege, advantage, or benefit which may be waived;
(2) actual or constructive knowledge of the right; and
(3) intention to relinquish the right.
While waiver can be implied through a party’s conduct, that conduct must clearly evidence the party’s intent to waive its rights. A mere delay in enforcing one’s rights will not result in a waiver of rights.
The elements of a claim for estoppel are:
1) the party against whom estoppel is sought must have made a representation about a material fact that is contrary to a position it later asserts;
2) the party claiming estoppel must have relied on that representation; and
3) the party seeking estoppel must have changed his position to his detriment based on the representation and his reliance on it.
Watson Clinic, LLP v. Verzosa, 816 So. 2d 832 (Fla. 2nd DCA 2002).
Florida courts enforce “anti-waiver” provisions in contracts to overcome the oft-used arguments of waiver and estoppel. Philpot v. Bouchelle, 411 So. 2d 1341 (Fla 1st DCA 1982); Western World, Inc. v. Dansby, 603 So. 2d 597 (Fla. 1st DCA 1992). The point of anti-waiver provisions is that, even if one party is in breach of the agreement, the non-breaching party will not necessarily be deemed to have waived the breach by allowing less than full performance under the parties’ agreement. Eskridge v. Macklevy, Inc., 468 So. 2d 337 (Fla. 1st DCA 1985) (construing anti-waiver provision in favor of non-breaching lessor).
For example in Philpot, a dispute arose from a lease option-to-purchase contract, when the lessor denied the lessee’s option-to-purchase for failure to satisfy conditions precedent under the lease (namely, failure to make timely monthly rent payments). Lessee sued, asserting that lessor waived the conditions precedent to the purchase-option by continually accepting lessee’s late payments. However, the court held the anti-waiver provision of the lease precluded lessee’s claims. The anti-waiver provision in the lease agreement provided:
The rights of the lessor under the foregoing shall be cumulative and the failure on the part of the lessor to exercise properly any rights given hereunder shall not operate to forfeit any of the said rights.
The court reasoned that the parties contractually agreed that the lessor’s acceptance of late performance by the lessee would not constitute a waiver of lessor’s rights. Therefore, the lessor “can hardly be considered as dealing inconsistently with the terms of the contract.”
In contrast to Philpot, the court in Western World, Inc. examined an anti-waiver provision that provided:
No waiver of any condition or covenant of this lease by landlord shall be deemed to imply or constitute a further waiver by landlord of any other condition or covenant of this lease.
Unlike the anti-waiver provision in Philpot, this court held the anti-waiver provision did not prevent a waiver, because the language did not specifically articulate that certain types of behavior did not constitute a waiver. According to the court, “implicit in this language [in the anti-waiver provision] is that certain conduct may constitute a waiver of a particular condition or covenant.”
As set forth in the cases cited above, courts will carefully analyze anti-waiver provisions. Despite the holdings of the cases cited above and that a contract may contain a solid anti-waiver provision, parties seeking to avoid a waiver or estoppel defense must still be careful of their actions. Indeed, if the party seeking to enforce the anti-waiver provision acts inconsistently with the clause, a waiver or estoppel argument may have merit.